Rajasthan High Court - Jaipur
Offshore Infrastructures Ltd vs State (P H E D ) And Ors on 6 January, 2017
Author: M.N. Bhandari
Bench: M.N. Bhandari
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT
JAIPUR
S.B.Civil Writ Petition No. 15290 / 2015
Offshore Infrastructures Limited, a Company incorporated under
the Companies Act, 1956 and having their office at, 22 Udyog
Kshetra Mulund Link Road, Mulund (W) Mumbai-400080.
..Petitioner
Versus
1. State of Rajasthan Public Health Engineering Department,
Ajmer Todarmal Marg, Jal Bhavan, Ajmer-305001.
2. Public Health Engineering Department Through its Principle
Secretary, Secretariat, Jaipur
3. Additional Chief Engineer Public Health Engineering Department
Region Ajmer, Todarmal Marg, Jal Bhavan, Ajmer-305001
4. Chief Engineer (SP) Public Health Engineering Department 2,
Civil Lines, Jaipur-302006
.....Respondents
_____________________________________________________ For Petitioner(s) : Mr. Rishab Khandelwal For Respondent(s) : Mr. Rajendra Prasad, AAG _____________________________________________________ HON'BLE MR. JUSTICE M.N. BHANDARI Judgment 06/01/2017 By this writ petition, a challenge is made to the communication dated 01.11.2013. A prayer is also made to direct the respondents to refund the amount of Rs.2,69,13,974/- recovered towards excise duty. The interest @18% p.a. has also been claimed.
Learned counsel for petitioner submits that a tender was floated by the respondents. The petitioner-company submitted bid without taking component of excise duty as it was exempted on (2 of 8) [CW-15290/2015] pipelines apart from other material forming part of the contract. The petitioner-company undertook the work but excise duty was deducted by the respondents from running bills contrary to the terms of agreement. The petitioner-company completed the work successfully and made an application to refund the amount towards excise duty illegally deducted from their running bills. The respondents did not consider the issue aforesaid thus petitioner was let with no option but to approach the committee under Clause 23 of General Conditions of Agreement. The committee rejected the claim in reference to Clauses 3.2 and 18 of the Special Conditions of Contract. The order passed by the committee has been challenged. When exemption from excise duty exists, it could not have been recovered by the respondents. Even as per Central Excise Act, if recovery of the excise duty is to be made, it is by the Excise Department only thus recovery of the excise duty by the respondents was without authority of law. Taking into consideration the aforesaid, impugned order dated 01.11.2013 deserves to be set aside with a direction to the respondents to refund the amount of Rs.2,69,13,974/-.
Learned counsel for respondents has opposed the petition. A preliminary objection has been raised about maintainability of the writ petition as it is arising out of contract and needs finding of fact. The contractual matters cannot be brought before this court by invoking Article 226 of the Constitution of India. The petitioner- company has remedy to prefer a civil suit for recovery of the amount, if any.
(3 of 8) [CW-15290/2015] Coming to the merits of the case, learned Additional Advocate General Shri Rajendra Prasad submits that under Clause 3.2, priority of contract has been given. The clause fixed first priority to letter of award and thereupon to Special Conditions of Contract (Part A and B). The general conditions of contract is after the aforesaid. As per Clause 18 of the Special Conditions of Contract, amount of excise duty was to be deducted from running bills and accordingly, the respondents deducted the amount of excise duty from running bills. The petitioner-company did not challenge the deduction aforesaid during the intervening period but refund of the amount is sought now after completion of the contract.
It is further submitted that exemption of excise duty was on certain conditions. The petitioner-company was required to obtain the certificate from the respondents to get exemption but other than submission of the affidavit, nothing exists to show process to seek exemption. As per Clause 13.5 of the General Conditions of contract, reference of excise duty exemption has been made. The direction therein is for the bidders to study the Notification carefully and exemption is to be availed while preparing their bid price. Necessary certificate from the District Collector is to be arranged by the Government as and when required. The petitioner-company was under an obligation to inform for arrangement of the certificate but no such information was given. It was further made clear that no statutory variations towards any taxes, duties, levies, etc. shall be payable to the contractor. Taking into consideration the aforesaid, there is no illegality in the action (4 of 8) [CW-15290/2015] of the respondents thus writ petition deserves to be dismissed.
I have considered the rival submissions made by learned counsel for the parties and perused the record.
The relevant paras of the agreement have been referred by the parties thus it would be gainful to refer those paras. Paras 13.5, 3.2 of Priority of Contract and Para 18 of Taxes and Duties are quoted for ready reference:
"13.5 The prices and amounts quoted by the Bidder shall allow for all costs including labour, materials, construction plant and equipment, transport charges, any other expenses to fulfill the obligations towards any ITB clause of the bid document referred, Custom Duty, Octrol, Income Tax, Sales Tax, Turnover Tax, Service Tax, Professional Tax or any other duties, levies, taxes or charges whatsoever to the State or Central Department or to the Local Bodies on the components or the completed Works or the operation and maintenance works and for satisfactory performance of the Bidder's obligations under this contract (including O&M contract). The cost of water and power shall be payable as per the provisions of General conditions and Special Conditions of contract. No statutory variations towards any taxes, duties, levies etc will be payable to contractor.
As per central Government notification no 06/2007 dated 1-3-2007, amended from time to time, excise duty exemption is available for the material used in specified components of water supply projects. Bidder may study the notification carefully and account for the exemptions that are to be availed while preparing their price bid, Necessary certificate from the District collector shall be arranged by the department as & when required. "No statutory (5 of 8) [CW-15290/2015] variations towards any taxes, duties, levies etc will be payable to contractor."
3.2 PRIORITY OF CONTRACT The documents forming part of the agreement are to be taken as mutually explanatory documents of one another. In case of discrepancies they shall be explained and adjusted by the Engineering in Charge. The priority of the Contract documents shall be as follows:
Letter of award Special Conditions of Contract Part A & Part B. Instructions to Bidders General Conditions of Contract Scope of Work and Technical specifications Drawings Schedule of prices The addenda issued in the tender document in relevant above sections shall be read with the respective sections while giving priority."
18. TAXES AND DUTIES All taxes, duties, levies applicable by any act of the Government of India and/or State of Rajasthan and/or of the local bodies on the company or its personnel, during the period of work in progress shall be of the Contractor.
All goods manufactured /procured and supplied by the contractor and work executed under this contract, responsibility of payment of sale tax, surcharge, octrol and any other tax and levies in force, responsibility of payment of all such taxes, duties, levies shall be of the contractor.
(6 of 8) [CW-15290/2015] However, there shall be exemption on excise duty on some items as per notification no.06/2007-CE dated 01.03.07 of Ministry of Finance and company affairs, Deptt. Of Revenue.
As per the notification no.06/2007 -CE dated 01.03.07 and as per latest amendment of Ministry of Finance and Company Affairs, Department of Revenue, Govt. of India, goods are exempted from excise duty such as pipes and all items on machinery, including instruments, apparatus and appliances, auxiliary equipments and their components/parts required for setting up of water treatment plants, pipes etc. The department shall provide required "intended use certificate" to the contractor for availing exemption on excise duty and in turn the department shall recover the same from the running account bills of the contractor."
As per the Priority of Contract, Special Conditions of Contract Part A and B have priority over instructions to the bidders and General Conditions of Contract. Para 18 is a part of Special Conditions of Contract and as per aforesaid para, responsibility for payment of taxes, duty and levies are on the contractor. The last para of the said provision makes reference for deduction of the amount of excise duty from running bills of the contractor. In view of above, deduction of the excise duty was made in terms of Para 18 of the Special Conditions of Contract. The action of the respondents cannot be said to be illegal to that extent.
The petitioner-company has made reference of Para 13.5 wherein bidder was directed to study the Notification and account for exemptions are to be availed while preparing their price bid. It (7 of 8) [CW-15290/2015] was to make them aware about certain exemptions of the excise duty. The certificate from the District Collector was to be arranged by the department as and when required.
The issue now comes about prayer for refund of the amount. The perusal of order passed by the committee under Clause 23 of the agreement justifies the action of deduction of the amount of excise duty from running bills. It does not discuss the issue of refund of the amount. If the deduction was permitted under Clause 18 of Special Conditions of Contract, recovery of the amount can be made by the department but it can be retained only if it is payable by them to the Excise Department. It is moreso when bidder was asked bid after taking into consideration the exemption of excise duty.
Taking into consideration the aforesaid, I find that order passed by the committee needs re-consideration about issue aforesaid. If items supplied or used by the petitioner-company were exempted by the Excise Department then while justifying the deduction from running bills, consideration needs to be made for its refund after completion of the work, if no duty was paid. Accordingly, impugned order dated 1st November, 2013 is set aside and the matter is remanded back to the committee to consider the issue as to why amount is not refundable to the petitioner, if excise duty was not imposed or paid by the department.
The preliminary objection to the maintainability of the writ petition on account of availability of the remedy before the civil court has been raised. I find that question raised in the writ petition does not require finding of fact. It is true that controversy (8 of 8) [CW-15290/2015] is arising out of contract but absolute bar does not exist to entertain the writ. In view of the above, I do not find objection of the respondents to be sustainable. The court has otherwise considered the issue favourable to the respondents to the extent their action in consonance to Para 18 of the Special Conditions of Contract and by giving it priority as per Clause 3.2. However, remand of the case has been made limited to the issue as to why amount recovered towards excise duty is not refundable to the petitioner-company. The issue aforesaid would be decided by the committee within a period of three months from the date of receipt of copy of this order.
The writ petition is disposed of with the aforesaid.
(M.N. BHANDARI)J. FRBOHRA