Kubera Constructions Pvt. Ltd. v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE GOPINATH P.** **THURSDAY, THE 1[ST] DAY OF SEPTEMBER 2022 / 10 TH BHADRA, 1944** ## **WP(C) NO. 28592 OF 2019** ## **PETITIONER:** SRI.KUBERA CONSTRUCTIONS PVT.LTD BALAJI CELEBRATION'B'WING, NEAR GANAPATI MANDIR, VISHRAMBAGSANGLI 416 415 ,REPRESENTED BY ITS DIRECTOR, MOTILAL PAREK, AGED 55 YEARS, S/O SRINARAYAN, FLAT NO.1, ARCHANA APARTMENT, NEAR GANAPATI MANDIR, VISRAMBAG, SANGLI-416 415 BY ADVS.GEORGE VARGHESE(PERUMPALLIKUTTIYIL) A.R.DILEEP P.J.JOE PAUL RAJAN G. GEORGE ## **RESPONDENTS:** - 1 STATE OF KERALA REPRESENTED BY CHIEF SECRETARY, GOVERNMENT SECRETARIAT, THIRUVNANTHAPURAM-695 001 - 2 SECRETARY TO GOVERNMENT OF KERALA INFORMATION TECHNOLOGY DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001 - 3 PRINCIPAL SECRETARY,GOVERNMENT OF KERALA , FINANCE DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001 - 4 PRINCIPAL SECRETARY TO GOVERNMENT OF KERALA KERALA STATE GOODS AND SERVICES TAX DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM -695 001 - 5 KERALA STATE IT INFRASTRUCTURE LTD . TC 14/196/2, CHANDRASEKHARAN NAIR STADIUM, THIRUVANANTHAPURAM695 033 REPRESENTED BY ITS MANAGING DIRECTOR,TC 14/196/2, CHANDRASEKHARAN NAIR STADIUM, THIRUVANANTHAPURAM-695 033 - 6 MANAGING DIRECTOR,KERALA STATE IT INFRASTRUCTURE LTD, TC 14/192/2, CHANDRASEKHARAN NAIR STADIUM, THIRUVANANTHAPURAM BY ADVS.SRI.K.A.ABDUL SALAM, SC, KERALA STATE IT INFRASTRUCTURE LTD. KSITIL SRI.SUNIL V.MOHAMMED ## **OTHER PRESENT:** ADV. THUSHARA JAMES (SR GP) **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.09.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C)No.28592/2019 2 ## **JUDGMENT** The petitioner was awarded a contract to construct a building in Techno City, Thiruvananthapuram by the 5[th] respondent- Kerala State Information Technology Infrastructure Limited (hereinafter referred to as KSITIL). The e-tender was floated on 17.5.2017. The last date for submission of tender was on 4.7.2017. The goods and services tax regime came into force, on 1.7.2017. 2. The case of the petitioner is that the petitioner was entitled to payment of goods and services tax (GST) over and above the amount for which the work was awarded. It is the case of the petitioner that the obligation of the 5[th] respondent to pay goods and services tax is clear from the tender documents, correspondence between the parties, minutes of Pre-Bid Meeting and general and special conditions of the tender forming part of Ext.P7 agreement executed between the petitioner and the 5[th] respondent. The claim of the petitioner for payment of GST was initially rejected by Ext.P15 communication from the Managing Director of the 5[th] respondent. A further claim of the petitioner again raising the contention that the petitioner was entitled to reimbursement of “service tax” was rejected by Ext.P25. The petitioner has, therefore, approached this Court seeking to quash Exts.P15 and P25 and for a direction to the 5[th] respondent to pay goods and services tax over and above the contract W.P.(C)No.28592/2019 3 amount for which the work was awarded to the petitioner. The petitioner also seeks a declaration that the petitioner is so entitled to payment of GST/ or at least the tax on the “service portion”. 3. The learned counsel for the petitioner submits that as is evident from clause 17 of Ext.P2 which forms part of the notice inviting tender, service tax will be paid extra by the 5[th] respondent. It is submitted that in Ext.P3 Pre-Bid Meeting also, it has been clarified as under:- _“KSITIL clarified that all the bidders may quote the work considering the cost implementation of GST. However, the service tax portion for works done in GST will be paid extra.”_ It is the case of the petitioner that there was a clear understanding that at least GST on the service part of the works contract will be reimbursed by the 5[th] respondent. It is submitted that the petitioner has paid a total sum of Rs.4,78,43,280/- toward GST on supplies made to the 5[th] respondent. It is submitted that the stand taken in Ext.P15 is completely contrary to the notice inviting tender and the minutes of the Pre-Bid Meeting. The learned counsel points out that when the minutes of the Pre-Bid Meeting clearly indicated that tax on the service portion will be reimbursed, it meant that the petitioner was clearly entitled to the reimbursement of such tax. It is submitted that the introduction of GST from 1.7.2017 did not take away the right of the petitioner to claim the benefit of the service tax portion. It is W.P.(C)No.28592/2019 4 submitted that GST is an indirect tax and the petitioner is entitled to collect such tax from the service recipient over and above the amount for which work was awarded (the taxable value of the service). It is submitted that going by Ext.P17 Circular issued by the Government of Kerala, the rates quoted by the contractors should be deemed to be exclusive of GST. It is submitted that Exts.P18 to P21 documents will clearly show that the petitioner is entitled to reimbursement of GST. It is submitted that the term 'service tax' used in Exts.P2 and P3 can only mean tax on services under the GST regime. It is submitted that the case of the petitioner is squarely covered by the judgment of a Division Bench of this Court in _**George C.A.**_ v. _**State of Kerala and others; 2021 KHC 2682**_ and that of a learned Single Judge of this Court in _**Sebastian Jose**_ v. _**State of Kerala and others; 2021 (5) KHC 518**_ 4. The learned counsel appearing for the 5[th] respondent submits that the claim made by the petitioner is clearly untenable. It is pointed out that on 15.7.2017, the petitioner had submitted a letter (Ext.R5(a) produced along with affidavit dated 1.8.2022) where it was specifically stated as follows:- _“While quoting we have considered 18% GST as per new Government notification instead of Service Tax, VAT and the same is included in our rates.”_ It is submitted that had the right of the petitioner been exclusive of W.P.(C)No.28592/2019 5 18% GST, the petitioner would not have been the L1 bidder and reference in this regard is made to Ext.R5(b). It is pointed out that in the work order issued to the petitioner on 7.9.2017 (Ext.P6), it was clearly stipulated that the amount for which the work is awarded is inclusive of all taxes. It is submitted that in Ext.P5 letter dated 24.7.2017, the petitioner stated as follows:- _“We have bided tender for above sited work, by mistake we have mentioned GST will be extra but now we withdraw our saying about GST and we accept the terms condition about taxes mentioned in tender and the clarification given in prebid meeting.”_ It is submitted that the decisions relied on by the petitioner stand on a completely different footing and the fact situation there was completely different to the fact situation in this case. It is submitted that the writ petition itself is not maintainable, as disputed questions of fact are involved, and further that the terms of the agreement between the parties provide that all disputes shall be subject to jurisdiction of Courts at Thiruvananthapuram. 5. I have considered the contentions raised. 6. Having regard to Ext.R5(a) letter issued by the petitioner on 15.7.2017, Ext.P5 letter issued by the petitioner on 24.7.2017 and the terms of Ext.P6 work order dated 7.9.2017, I am clearly of the opinion that there is absolutely no merit in the contention taken by the petitioner. It is true that the notice inviting tender, which was issued W.P.(C)No.28592/2019 6 in the Pre-GST period, mentioned that the service tax will be paid extra by the 5[th] respondent. It is also true that in the Pre-bid meeting which was also held before the introduction of GST, there is a clarification given to a query raised by one of the contractors that “ _service tax portion of works done in GST will be paid extra_ .” It must be noted at this point that the petitioner did not even take part in the Pre-Bid meeting, as is evident from the list of participants attached to the minutes of the meeting. In the matter of works contract, in the Pre-GST regime, the service tax was to be discharged under the provisions of the Finance Act, 1994 as amended from time to time and the VAT under the Kerala Value Added Tax Act was to be discharged on the value of the goods incorporated in the works contract. Following the introduction of goods and services tax, the tax on both supply of services and supply of goods was subsumed into one tax. In other words, after the introduction of GST from 1.7.2017, there was no scope for demand or payment of service tax as a component outside the GST regime. Therefore, there is absolutely no merit in the contention taken by the petitioner that the petitioner was entitled to reimbursement of tax on the services portion going by the stipulations in Exts.P2 and P3. The decisions relied on by the petitioner were rendered in completely different factual scenarios and have no application to the facts of the present case. The communications W.P.(C)No.28592/2019 7 issued by the petitioner at Ext.R5(a) and Ext.P5 clearly indicate that the petitioner was, on its own showing, not entitled to the reimbursement of any GST. Further the work order also stipulates that the work was awarded for the amount shown therein inclusive of all taxes. The petitioner is therefore, not entitled to any relief in this writ petition and it is accordingly dismissed. sd/- **GOPINATH P. JUDGE** acd W.P.(C)No.28592/2019 8 ## **APPENDIX OF WP(C) 28592/2019** |PETITIONER EXHIBITS|| |---|---| |EXHIBIT P1|A TRUE COPY OF THE CERTIFICATE OF| ||INCORPORATION OF THE PETITIONER AS PVT.LTD.| ||COMPANY| |EXHIBIT P2|A TRUE COPY OF THE RELEVANT PAGES OF THE| ||COMPOSITE TENDER DOCUMENT INCLUDING NOTICE| ||INVITING TENDER, RELEVANT PAGES OF GENERAL| ||CONDITIONS, SPECIAL CONDITIONS, TECHNICAL| ||SPECIFICATION OF TENDER| ||NO.KSITIL/TC/ITB/2017-18/001 DATED| ||17.05.2017| |EXHIBIT P3|A TRUE COPY OF MINUTES OF THE PRE BID| ||MEETING HELD ON 15.06.2017| |EXHIBIT P4|A TRUE COPY OF LETTER DATED 15.07.2017| |EXHIBIT P5|A TRUE COPY OF LETTER DATED 24.07.2017 OF| ||THE PETITIONER SUBMITTED TO THE 5TH| ||RESPONDENT| |EXHIBIT P6|A TRUE COPY OF WORK ORDER KSITIL/TC/ITB/17-| ||18/WO-001 DATED 07.09.2017 ISSUED BY THE 5TH| ||RESPONDENT| |EXHIBIT P7|A TRUE COPY OF AGREEMENT DATED 11.01.2018| ||EXECUTED BETWEEN THE 5TH RESPONDENT AND THE| ||PETITIONER.| |EXHIBIT P8|A TRUE COPY OF FIRST RUNNING ACCOUNT BILL| ||DATED 20.02.2018 FOR RS.10,49,31,114/-| |EXHIBIT P9|A TRUE COPY OF 2ND RUNNING ACCOUNT BILL| ||DATED 28.04.2018 FOR RS.4,57,82,163/-| |EXHIBIT P10|A TRUE COPY OF THE LETTER DATED 20.06.2018| |EXHIBIT P11|A TRUE COPY OF BILL DATED 15.07.2018| ||SUBMITTED FOR AN AMOUNT OF RS.5,84,60,237/-| |EXHIBIT P12|A TRUE COPY OF BILL DATED 08.08.2018 FOR| ||RS.5,57,59,555/- INCLUDING GST OF| ||RS.85,05,694.88(CGST RS.42,52,847.44& SGST| ||RS.42,52,847.44)| |EXHIBIT P13|A TRUE COPY OF BILL DATED 05.10.2018 FOR| ||RS.5,37,35744/-| |EXHIBIT P14|A TRUE COPY OF THE LETTER DATED 08.10.2018| |EXHIBIT P15|A TRUE COPY OF LETTER NO.KSITIL/TC/ITB/2018-| ||19/2031 DATED 12.10.2018 ISSUED BY THE 6TH| ||RESPONDENT| |EXHIBIT P16|A TRUE COPY OF LETTER DATED 16.10.2018| W.P.(C)No.28592/2019 9 EXHIBIT P17 A TRUE COPY OF CIRCULAR NO.90/2017/FIN DATED 14.12.2017 DETAILING THE POLICY OF THE GOVERNMENT OF KERALA ON GOODS,SERVICES AND WORKS UNDERTAKEN BY GOVERNMENT DEPARTMENT OR GOVERNMENT AGENCY. EXHIBIT P18 A TRUE COPY OF LETTER NO.IND.R.W.B2/317/2018 FINANCE DATED 19.12.2018 EXHIBIT P19 A TRUE COPY OF THE LETTER IND PW-B2/317/2018 FIN DATED 10.12.2018 EXHIBIT P20 A TRUE COPY OF THE LETTER NO.80821/H3 / 2015/PWD DATED 20.01.2016 EXHIBIT P21 A TRUE COPY OF GO(P) NO.2/2018/PWD DATED 27.01.2018 EXHIBIT P22 A TRUE COPY OF LETTER KCPL/2018 DATED 24.12.2018 EXHIBIT P23 A TRUE COPY OF THE REPRESENTATION EXHIBIT P24 A TRUE COPY OF SCHEDULE II OF CGST ACT,2017 EXHIBIT P25 A TRUE COPY OF LETTER NO.KSITIL/TC/ITB/201920/2598 DATED 13.08.2019 ## RESPONDENTS' EXHIBITS |EXT.R5(a)|TRUE COPY OF LETTER DATED 15.07.2017 SUBMITTED BY THE<br>PETITIONER.| |---|---| |EXT.R5(b)|TRUE COPY OF THE BOQ SUMMARY DETAILS| |EXT.R5(c)|TRUE COPY OF THE AFFIDAVIT DATED 07.07.2017<br>SUBMITTED BY THE PETITIONER.| |EXT.R5(d)|TRUE COPY OF THE WORK ORDER DATED 07.09.2017|