N.R. Shaji v. Chief Executive Officer, Info Park, Thapasya, Kusumagiri P.O., Kakkanad, Kochi; Commercial Tax Officer (Works Contract), Office of the Deputy Commissioner, Commercial Taxes, Perumanoor, Ernakulam; Assistant Commissioner (Appeals) Commercial Taxes, Perumanoor, Kochi; Deputy Commissioner, Commercial Taxes, Perumanoor, Kochi

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **FRIDAY, THE 3RD DAY OF MARCH 2017/12TH PHALGUNA, 1938** **WP(C).No. 12282 of 2015 (I) ----------------------------** **PETITIONER: ----------** **N.R.SHAJI, R.S.P CONSTRUCTIONS,XII/26B, NANIYATTIL HOUSE,KAKKANAD,KOCHI-682 030. BY ADVS.SRI.M.K.SUBHAKARAN SRI.K.SRIKUMAR (SR.)** **RESPONDENT(S):** **--------------** **1. THE CHIEF EXECUTIVE OFFICER, INFO PARK, THAPSYA,KUSUMAGIRI P.O,KAKKANAD,KOCHI 682 030** **2. THE COMMERCIAL TAX OFFICER(WORKS CONTRACT), OFFICE OF THE DEPUTY COMMISSIONER, COMMERCIAL TAXES,PERUMANOOR,ERNAKULAM 682 015.** **3. ASSISTANT COMMISSIONER(APPEALS) COMMERCIAL TAXES,PERUMANOOR,KOCHI-682 015.** **4. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES,PERUMANOOR,KOCHI-682 015. R1 BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS R2-R4 BY GOVERNMENT PLEADER SMT M.M.JASMINE** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **K.V.** ## **WP(C).No. 12282 of 2015 (I)** ## **----------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** **----------------------EXHIBIT P1 TRUE COPY OF THE RELEVANT PAGE OF THE TENDER NO INFO PARK/PHASE II/TENDER 001/2010-11 DATED 23-11-2010** **EXHIBIT P2 TRUE COPY OF THE RELEVANT PAGE OF THE WORK ORDER NO INFOPARK/WC/1068/2011 DATED 09-08-2011** **EXHIBIT P3 TRUE COPY OF THE ROIGINAL ASSESSMENT ORDER WITH DEMAND NOTICE.** **EXHIBIT P4 TRUE COPY OF THE APPLELLATE ORDER NO KVATA 1398/14 DATED 29-08-2014 OF ASSISTANT COMMISSIONER(APPEALS) EXHIBIT P5 TRUE COPY OF THE MODIFIED ORDER DATED 18-12-2014** **EXHIBIT P6 TRUE COPY OF THE DECLARATION IN FORM 43 ISSUED BY INFO PARK EXHIBIT P7 TRUE COPY OF THE FINAL RUNNING BILL SHOWING THE DEDUCTION OF RS. 18,04,595.OO SHOWN AS 'WITHHELD'. EXHIBIT P8 TRUE COPY OF THE LETTER ISSUED TO THE 1ST RESPONDENT EXHIBIT P9 TRUE COPY OF THE LETTER ISSUED BY THE 1ST RESPONDENT** **RESPONDENT(S)' EXHIBITS -----------------------** **R(1)(A) COPY OF THE NOTIFICATION NO SO 1064 (E0 DATED 16.5.2011 ISSUED BY THE MINISTRY OF COMMERCE AND INDUSTRY, GOVERNMENT OF INDIA.** **R1(B) COPY OF THE TENDER DOCUMENTS DATED 17.12.2010 SUBMITTED BY THE PETITIONER (INCLUSIVE OF TECHNICAL BID AND PRICE BLD) R(1)(C) COPY OF THE MINUTES OF THE MEETING HELD ON 9.12.2010. R(1)(D) COPY OF THE LETTER OF INTENT DATED 12.7.2011 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER.** **R(1)(E) COPY OF THE WORK ORDER DATED 9.8.2011 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER . P(1) (F) COPY OF THE DECLARATIONS IN FORM NO 43 DATED 26.3.2013 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. R(1) (G) COPY OF THE CERTIFICATE IN FORM NO 20 F ALONG WITH THE TAXPAYERS COUNTERFOIL DATED 6.3.2013 PERTAINING TO THE WORK EXECUTED IN NON-SEZ AREA BY THE PETITIONER. R(1) (H) COPY OF THE FINAL BILL DATED 11.2.2013 SUBMITTED BY THE PETITIONER.** **/TRUE COPY/** **P.A.TO JUDGE** **K.V.** ## K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - - W.P(C) No. 12282 of 2015 I - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 03[rd] day of March, 2017 ## J U D G M E N T The petitioner in the above writ petition, essentially claims the tax deducted at source by the 1[st] respondent awarder, since the works contract executed by the petitioner for the 1[st] respondent a declared Special Economic Zone (SEZ) was tax exempted. As an alternative it is prayed that at least the State be directed to effect forfeiture of the amounts so retained as collected tax. 2. The petitioner entered into a contract with the 1[st] respondent as per Ext.P1 agreement. Without going into the details of the terms of the contract, suffice it to WPC.No.12282/2015 : 2 : notice that it was a works contract and by clause 1.17.04 of Ext.P1 all statutory deductions like Income Tax, workers welfare fund and works contract tax were to be recovered from the bills at applicable rates. The 1[st] respondent was declared as a Special Economic Zone (SEZ) and was hence entitled to exemption from tax. The works contract executed within the SEZ was also exempted from tax. However, the 1[st] respondent while issuing bills, showed the works contract tax at the rate of 8% and withheld the said amounts from payment. It is an admitted fact that the 1[st] respondent did not pay the same to the Government also. The petitioner contends that in fact, the amounts are to be either disbursed to the petitioner-the works contractor or paid to the Government. WPC.No.12282/2015 : 3 : 3. The learned Senior Counsel appearing for the petitioner would contend that the contract itself was executed in 2011-12 and the final bill was issued on 11.04.2012. Almost Rs.18,00,000/- were retained with the 1[st] respondent-awarder being the 8% works contract tax specifically shown in the bills. In such circumstances, there should be inferred a collection from the awardee and in view of the exemption, it should be refunded to the petitioner. If not, at least the same should be paid to the Government. 4. In that context it is also submitted that the petitioner's liability having been compounded under Section 8 of the Kerala Value Added Tax Act, 2003 (for short “KVAT Act” only), the petitioner's liability to tax would be only 3%. If the tax so retained by the 1[st] WPC.No.12282/2015 : 4 : respondent is forfeited by the Government, then, necessarily it would have to be adjusted to the tax liability of the petitioner; in which event, the petitioner would be entitled to seek refund to the extent of 5% since his liability is only 3%. 5. The learned Counsel for the 1[st] respondent would contend that the contract contemplated a situation where the exemption would be granted in future. The tender document is produced as Ext. R1(b) which shows the last date as 17.12.2010. The exemption was granted by Ext. R1(a) subsequent to the tender; by notification dated 16.05.2011. The who persons submitted tenders under the notification, factored the tax element also when making the bid and in such circumstance, the agreement specifically provided that WPC.No.12282/2015 : 5 : on grant of exemption to the extent of the statutory taxes and duties, the benefit would be transferred to the respondent. 6. To buttress the above contention, clause 1.17.05 of the agreement is specifically referred to, which is extracted hereunder:- “1.17.05: The proposed area of around 10 acres of land for filling is included in the area where formal SEZ approval has obtained. SEZ notification for the said land is expected soon. SEZ exemption for Taxes and duties as per rules will be eligible to developer and their subcontractors. If the proposed site is notified as SEZ during the time of execution, the exemption shall be WPC.No.12282/2015 : 6 : transferred to Infopark for all materials purchased and work done after the date of approval of material list for getting SEZ benefits.” 7. The learned Senior Counsel would contend that on exemption being granted it cannot be contended by the 1[st] respondent that the tax would be collected and retained by them, which would be conferring undue benefit over and above the exemption already granted by the State. It is also pointed out that the specific contention was taken in an appeal in which the appellate authority by Ext.P4 had directed the Infopark authorities to return the tax deducted. The Government contrary to the stand taken by the appellate authority has asserted by a counter WPC.No.12282/2015 : 7 : affidavit that the collected tax has to be forfeited under Section 10(3) of the KVAT Act being collected tax. 8. With respect to the petitioner's contention, it is to be noticed that it involves an interpretation of the specific terms of the agreement and also of the exact bid made by the tender document as also the factors on which the bid was based. The 1[st] respondent had also claimed that there were many meetings between the various contractors in which it was specifically pointed out and agreed upon that the element of tax, if exempted would not be paid by the awarder to the contractors. It is also submitted that there is no collection as such effected and the specific clause only indicates that if exempted, there would be deductions made as to the tax component which WPC.No.12282/2015 : 8 : otherwise would have been paid to the Department. It is not a retention of tax collected but reduction of the tax component from the bid amounts. 9. These are disputed questions of facts; as to the time when contract was entered into and the date from which the exemption was granted and the factors on which the bid was based as also the terms of the contract, which could have been agitated before a proper civil forum. This Court would not venture into such an exercise in this petition filed under Article 226 of the Constitution of India. The petitioner also slept over his rights and approached this Court only in the year 2015; specifically 09.04.2015 when even the remedy of recovery from the awarder by way of a properly instituted civil suit stood barred by limitation. WPC.No.12282/2015 : 9 : In such circumstance, this Court would not attempt to leave any liberty to the petitioner to now approach the Civil Court for reason only of the pending writ proceedings, which also has been taken delayed. 10. The learned Senior Counsel also relies on a judgment of the Hon'ble Supreme Court reported in 2009(8) SCC 235 State of Maharashtra and others v. Swanstone Multiplex Cinema (P) Ltd. Specific reference is made to Paragraph 38 and 39 which are extracted herein:- 38. In absence of any express statutory provision, allowing the proprietors of the multiplex theatre to retain the benefit, it is difficult for us to arrive at such an inference. The State has power to impose tax. The State has a power to grant exemption or concession in respect of payment of tax. It has no power WPC.No.12282/2015 : 10 : in terms of the provisions of the Constitution or otherwise to allow an assessee to collect the tax and retain the same. We will assume that to that effect the provisions are not very clear but the superior Courts will not interpret the statute in such a way which will confer an unjust benefit to any of the parties, i.e., either the taxpayer or tax collector or the State. The statute must be interpreted reasonably. It must be so interpreted so that it becomes workable. Interpretation of a statute must subserve a constitutional goal. 39. A statue of this nature, in our considered opinion, cannot be interpreted in such a manner so as to enable an entrepreneur to get undue advantage to the effect that he would collect tax from the cinemagoers and appropriate the same. When a person collects WPC.No.12282/2015 : 11 : tax illegally, he has to refund it to the taxpayers. If the taxpayers cannot be found, the Court would either direct the same to be paid and/or appropriated by the State. In a given case, this Court in exercise of its jurisdiction under Article 142 of the Constitution of India may also issue other directions, as has been done in Indian Banks' Association, Bombay and Others v. Devkala Consultancy Service and Others [(2004) 11 SCC 1] in a similar situation where it was difficult for the Court to direct refund of a huge amount to a large number of depositors from whom the bank had illegally collected, this Court directed that the amount be spent for the benefit of the disabled in terms of the WPC.No.12282/2015 **==> picture [26 x 9] intentionally omitted <==** provisions of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. As has been found, the petitioner could not have agitated the case before this Court under Article 226. The consideration of the principles laid down in the cited decision hence becomes inconsequential; and there were conflicting contentions on facts, which have to be resolved before it is found that the petitioner is entitled to a disbursement simplicitor of the amounts computed as tax. 11. The further question is as to whether the State is entitled to seek for forfeiture of the amounts said to have been collected. As of now, the State has not initiated and it would be any proceedings WPC.No.12282/2015 : 13 : premature to find whether the same is possible or not and any observation made would affect the contentions of either parties, the State and the awarder if such proceedings are taken up. However, if the proceedings are taken up and eventually the forfeiture is effected then necessarily the question of whether the petitioner could seek for a refund also would arise; which too as of now cannot be decided prematurely. Leaving open such issues the writ petition all the same is liable to be dismissed. With the above reservations, writ petition would stand dismissed. No Costs. Sd/- (K. VINOD CHANDRAN, JUDGE) jma //true copy// P.A to Judge