By TIOL News Service

CHENNAI, MAR 29, 2016: THE Petitioner is carrying on cable laying works to various parties, including the first respondent, who is the main contractor for BSNL. The scope of work was in the nature of cable laying and rehabilitation of external plant in St. Thomas Mount and Chrompet of South Area of BSNL, Chennai Telephones. The Petitioner informed the respondent main contractor that the work executed is liable to service tax. While presenting the rates, the petitioner had not anticipated service tax imposition and now that, the first respondent has to bear the service tax burden, being the indirect tax levy, which can be passed on to the first respondent. The entire Service Tax was paid by the petitioner and are yet to be reimbursed or recovered from the first respondent. The Petitioner filed the Writ Petition seeking directions to the respondent main-contractor to release all the payments due along with interest.

The respondent contended that they have appealed to CESTAT, Chennai against the demand of Service Tax by the department from them and they are constrained to hold the amount applicable to the petitioner firm from the payments received from BSNL and other customers till the issues are resolved with the service tax department and the company has been declared as a sick company.

After hearing both sides, the High Court held:

+ In the absence of any averment stated in the affidavit, filed in support of the writ petition that the petitioner got the leave from BIFR for filing the writ petition for claiming a sum of Rs.67,00,000/-, the writ petition cannot be maintained. That apart, when the contract is between the first respondent and the petitioner, who is a sub contractor of the first respondent, the claim made by the petitioner to the tune of Rs.67,00,000/- cannot be made in the writ petition.

+ The contract was only between the first respondent and the BSNL and the petitioner is not a party to the said contract. Further, there is no clause in the contract between the first respondent and the petitioner with regard to the payment of Service Tax by the petitioner. In such circumstances, in the absence of any contract between the petitioner and the first respondent with regard to the payment of service tax and the reimbursement of the same, the said issue cannot be gone into in the writ petition. Therefore, the claim made by the petitioner can be decided only by a competent civil Court and not under Article 226 of the Constitution of India.

+ The writ petition is devoid of merits and the same is dismissed. However, it is open to the petitioner to file a civil suit as against the first respondent for claiming the amount from the first respondent in accordance with law.

(See 2016-TIOL-610-HC-MAD-ST)