Delhi District Court
M/S Avng Infrastructures Pvt. Ltd vs The Commissioner on 11 January, 2023
IN THE COURT OF SHRI SANJAY SHARMAI :
DISTRICT JUDGE (COMMERCIAL COURT)
EAST DISTRICT
KARKARDOOMA COURTS : DELHI
CS (Comm) No. 16/2020
M/s AVNG Infrastructures Pvt. Ltd.
(nee M/s Shravan Kumar Aggarwal)
having its registered office at
H.No. 2516, Basement floor,
Hudson Lane, Kingsway Camp
Delhi - 110009
through Shri Vikrant Gupta Director ................Plaintiff
Versus
1. The Commissioner
East Delhi Municipal Corporation,
419, MDC, Udyog Sadan
Patparganj, New Delhi - 110096
2. The Executive Engineer
Shahdara North (Project I)
East Delhi Municipal Corporation,
Opp. Shyamlal College, GT Road
Shahdara, Delhi - 110032
3. DVAT Officer
Ward 113 (Special Zone)
Vyapar Bhawan, IP Estate
New Delhi 110002 ................Defendants
Date of institution : 14.01.2020
Date of reserving judgment : 20.12.2022
Date of judgment : 11.01.2023
JUDGMENT:
The plaintiff has filed the present suit for recovery of a sum CS (Comm) No. 16/2020 M/s AVNG Infrastructures Pvt. Ltd. vs East Delhi Municipal Corporation 1 of 9 of Rs.5,53,983/ against the defendant alongwith pendente lite and future interest.
1.1 In brief, the facts as averred in the plaint are that the plaintiff is a company incorporated under the Indian Companies Act and the present suit has been filed through one of its Director namely Shri Vikrant Gupta who has been authorized to file this suit by the Board Resolution of the company dated 10.12.2019. It is averred that the plaintiff company is registered Class I contractor with the office of defendant no. 1 and had been executing the work contracts in various projects of the defendants for the past 24 years under various Executive Engineers in the hierarchy under the defendant. The defendant no. 1 is a statutory body incorporated under the Delhi Municipal Corporation Act and is involved in getting executed various developmental projects within the territory of East Delhi Municipal Corporation (EDMC for short). 1.2 It is averred that work order no. PRI/Shahdara North SYS/20162017/9 dated 30.09.2016 was awarded to the plaintiff for construction of pakka school building of the primary school at A2 block, Nand Nagari, Shahdara (North), Delhi. The said work was duly completed and executed by the plaintiff on 28.02.2016. Defendant no. 2 passed various bills during execution of the work by the plaintiff however, the relevant bills for payment of the work order are bill number 01 PL dated 08.08.17 (2 nd RA Bill for Rs. 94,87,025/) and bill number 02 PL dated 08.08.17 (3 rd RA Bill for Rs. 27,69,225/). On both the said bills, a total sum of Rs. 4,90,250/ was deducted as DVAT/TDS and it was deposited with the department on 07.09.17. It is the case of the plaintiff that though the work was completed before 01.07.17 but the bills for payment CS (Comm) No. 16/2020 M/s AVNG Infrastructures Pvt. Ltd. vs East Delhi Municipal Corporation 2 of 9 were passed on 08.08.17, and the payment was remitted thereafter. The plaintiff could not trace the sales tax deducted and deposited against his DVAT account and it called upon the defendant in this regard. Defendant no. 2 intimated the plaintiff vide communication dated 23.10.18 that the sales tax deducted was deposited with the DVAT department on 07.09.17 for a sum of Rs. 4,90,250/ for the period 2nd quarter 201718. The plaintiff protested to the defendant repeatedly that it could not have deposited the sales tax under the DVAT Act 2004 since the said Act was repealed on 30.06.17 and GST Act 2017 came into force and therefore, defendant no. 2 was liable to remit the said amount of Rs. 4,90,250/ to the plaintiff. However, the defendants took a plea that since the work was executed in June 2017, when the DVAT was in force, the tax was rightly deposited under the said DVAT Act. The plaintiff served a legal notice dated 17.06.19 and 10.07.19 calling upon the defendants to pay the tax amount so deposited by them which was replied by defendant no. 2 vide reply dated 24.07.19. 1.3 Thus, it is claimed by the plaintiff that the tax was wrongly deposited by the defendants under the DVAT Act instead under the GST Act and as such, it could not get any credit of the inputs of the sales tax for the same to which it was entitled as per the GST Act and therefore, suffered a loss. Hence, the present suit has been filed by the plaintiff for the recovery of the said tax alongwith interest @ 12% per annum w.e.f. 08.08.17 till 07.09.19 amounting to Rs. 63,732/, making the suit amount to be 5,53,982/.
2. Defendants were duly served with the summons of the suit and their Counsel Shri Anil Mishra Advocate entered appearance and the written statement was filed on behalf of both CS (Comm) No. 16/2020 M/s AVNG Infrastructures Pvt. Ltd. vs East Delhi Municipal Corporation 3 of 9 the defendants.
2.1 A preliminary objection was taken in the written statement that the suit is bad for nonjoinder of DVAT department since the tax was deposited with the said department. 2.2 On merits, the facts regarding the work contract, execution of the same, raising of bills by the plaintiff and their payment were admitted. It was pleaded that the bills for the work in question were passed on or before 01.07.17 but the payment was released in the month of August 2017 and hence, the DVAT, already deducted in the month of June 2017 was deposited through challan on 01.09.17. It was submitted that the officials of the plaintiff were informed about the deduction of the DVAT and were asked to contact Trade and Taxes Department of the Govt. of Delhi for any clarification. It was also contended that the defendants had requested the concerned DVAT officials vide various letters to refund the amount of Rs. 4,90,250/ to EDMC so that it can be returned to the plaintiff. It was also contended that the plaintiff never asked the defendants to deposit the sales tax under the GST Act but asked to deposit the same with the DVAT department and accordingly it was deposited. Rest of the contentions were denied.
3. The plaintiff also filed replication to the written statement of the defendants, reiterating the contents of the plaint and denying the counter allegations.
3.1 At the trial, the defendants filed an application under order 1 Rule 10 CPC for impleading DVAT department as a necessary party. In order to avoid multiplicity of litigation, the said application was allowed and DVAT department was impleaded as defendant no. 3. Amended memo of parties was accordingly filed CS (Comm) No. 16/2020 M/s AVNG Infrastructures Pvt. Ltd. vs East Delhi Municipal Corporation 4 of 9 without necessitating for amendment of plaint. Accordingly, summons were issued to the newly added defendant and Shri Nitin Tomar, Inspector Sales Tax from Sales Tax department appeared on 07.05.22 and was granted time to file written statement however, the said department failed to file the written statement within the statutory period and also failed to appear on the subsequent dates. Accordingly, its right to file written statement was forfeited vide order dated 12.07.22.
4. From the pleadings of the parties, following issues were framed on 11.10.2022 :
1. Whether the plaintiff is entitled for a decree against the defendants in the sum of Rs.
5,53,982/ with interest if any and if yes, at what rate and for which period? OPP
2. Relief
5. At the trial, the plaintiff examined Shri Vikrant Gupta, its Director as PW1. He deposed the facts as stated in the plaint, by way of affidavit Ex.PW1/A and also proved various documents as under :
Certificate of incorporation of the plaintiff company as Ex.PW1/1.
Board Resolution dated 10.12.2019 in my favour as Ex.PW1/2.
Copies of letters dated 03.1.2018, 27.6.2018, 23.8.2018, 03.10.2018 sent to the defendant as Ex.PW1/3, PW1/4, PW1/5 and PW1/6 respectively.
(Admitted documents).
Copy of letter dated 23.10.2018 as Ex.PW1/7 and another letter dated 16.11.2018 as Ex.PW1/8.
CS (Comm) No. 16/2020M/s AVNG Infrastructures Pvt. Ltd. vs East Delhi Municipal Corporation 5 of 9 Copy of legal notice dated 17.6.2019 alongwith postal receipts as Ex.PW1/9.
Reply to the said legal notice dated 24.7.2019 as Ex.PW1/10.
NonStarter Report from DLSA as Ex.PW1/11.
6. The defendant examined two witnesses. DW1 Shri Pramod Kumar Singh was the Executive Engineer Project I, Shahdara (North), EDMC and he reiterated the contents of the written statement as above in his affidavit Ex. DW1/A and proved following documents: Second and third RA/Bills for the work in question passed on or before 01.7.2017 mentioned as Ex.DE1/1. However, same were already exhibited as Ex.PW1/D1.
DVAT deducted in the month of June 2017 mentioned as Ex.DE1/2. However, same is already exhibited as Ex.PW1/D2.
Challan/Reference No.420295353400917 dated 01.9.2017 has been mentioned as Ex.DE1/4. However, same is exhibited as Ex.DE1/3.
Correspondence dated 23.10.2018 vide which the plaintiff was intimated about DVAT and was asked to contact Trade & Taxes Department, Govt. of Delhi, has been mentioned as Ex.DE1/5. However, same is already exhibited as Ex.PW1/7 .
Letters dated 20.12.2019, 17.1.2020 and 25.2.2020 to refund the amount of Rs.4,90,250/ to EDMC as Ex.DE1/5, DE1/6 and DE1/7 respectively.
The defendants also examined Shri Anil Kumar, Project I, Shahdara (North), EDMC, as DW2. He also relied upon the same documents.
CS (Comm) No. 16/2020M/s AVNG Infrastructures Pvt. Ltd. vs East Delhi Municipal Corporation 6 of 9 All the witnesses were duly cross examined.
7. I have heard Ms. Savita Malhotra - Ld. Counsel for the plaintiff and Shri Anil Mishra - Ld. Counsel for the defendants and have also gone through the written submissions filed by the plaintiff as well as records of the case.
My issuewise findings are as under:
ISSUE No. 1 :
8. The fact that the plaintiff executed a work contract for the defendants is not disputed. It is also not disputed that the bills raised by the plaintiff were cleared and paid by the defendants. The only dispute is that the defendants claim that they deposited the tax/TDS rightly with the DVAT department since the bills were passed on or before 01.07.17 and hence, the DVAT was deducted in the month of June 2017 but the tax was deposited on 01.09.17. On the other hand, the claim of the plaintiff is that the tax should have been deposited with the GST department when it was so deposited on 07.09.17. It is also its contention, that the tax was deposited showing it for the period 'second quarter 201718' and it could not have been deposited with the DVAT department since the DVAT Act 2004 was repealed and GST Act 2017 came into force w.e.f. 01.07.17. According to the plaintiff, the tax is deducted at the time of payment of bill and not at the time of passing of the bill or making the payment whichever is earlier. The plea of the defendants is otherwise. According to them, the tax is deducted at the time of payment or passing of the bill.
8.1 Ld. Counsel for the defendant relied upon the extracts relating to discharge of liability of works contract according to which the tax at source is required to be deducted either at the time CS (Comm) No. 16/2020 M/s AVNG Infrastructures Pvt. Ltd. vs East Delhi Municipal Corporation 7 of 9 of any payment or at the time of recording liability to make the payment. Thus, the tax was rightly deducted at the time of passing of the bill. According to DW1, the second and third RA bills in question were passed on or before 01.07.17 and the DVAT was deducted in the month of June 2017 though it was deposited on 01.09.17 vide Ex. DE 1/4. DW2 deposed in the cross examination that the contractor will get the benefit of deposited tax only for the quarter in which the tax is deposited and not in the quarter in which it is shown to be deducted on paper in the bill form. He admitted that as per record Ex.DE1/3, the tax for second and third RA Bills is shown to have been deposited in second quarter. 8.2 Thus, it is clear from the aforesaid that the bills were passed in the month of June and the DVAT was deducted at that very time. However, since the payment was made to the plaintiff in August 2017, the DVAT was deposited in September 2017 showing it as deposited in the second quarter. In the opinion of this court, when the DVAT was deducted in June, it should have been deposited showing it to be of the first quarter. Alternatively, in case it was deposited in the second quarter, it should have been deposited under the GST Act since by that time, i.e. with effect from 01.07.2017, the said GST Act came into existence. Hence, the defendant committed a mistake in this regard. 8.3 It was submitted during arguments that since no credit was given to the plaintiff because of the deposit of the DVAT by the defendant in the second quarter, it had to pay the due tax at the time of self assessment of the sales tax for the relevant quarter. It means that there was a double taxation on the plaintiff and the DVAT department was unduly enriched which is not permissible.
CS (Comm) No. 16/2020M/s AVNG Infrastructures Pvt. Ltd. vs East Delhi Municipal Corporation 8 of 9 Hence, the plaintiff is entitled for the refund of the tax so deposited by the defendant with the DVAT department for the second quarter. This issue is decided accordingly.
ISSUE NO. 2/Relief :
9. For the foregoing reasons and in the peculiar circumstances, the suit of the plaintiff is decreed and it is hereby directed that defendant no. 3 i.e. the DVAT department shall refund the tax so deposited by defendant no. 1 EDMC with it in respect of the plaintiff for the second quarter vide challan/reference number 420295353400917 dated 01.9.17 amounting to Rs. 4,90,250/ to defendant no. 1 EDMC and on receipt of the said refund tax, defendant no. 1 EDMC shall refund the said tax to the plaintiff. However, in the special circumstances, no order is passed as to interest. Costs of the suit are awarded to the plaintiff.
Decree Sheet be prepared accordingly. File be consigned to Record Room.
ANNOUNCED IN OPEN COURT ON 11th day of January 2023 (SANJAY SHARMAI) District Judge (Commercial Court) East District Karkardooma Courts, Delhi CS (Comm) No. 16/2020 M/s AVNG Infrastructures Pvt. Ltd. vs East Delhi Municipal Corporation 9 of 9