M/S Sks Karkala Infra Projects PVT LTD vs. State Of Karnataka
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Cause title — parties, addresses and appearances
ORDER
The petitioner has sought for directions to the respondents to pay Goods and Services Tax (GST) to the petitioner in terms of the RA bills submitted by the petitioner with a further direction to the respondents to pay the RA bill amounts that would be raised by the petitioner in future without deduction. It is undisputed that the petitioner, as a Class-1 contractor, has successfully bid for 'Old City Bus stand Redevelopment', and it is also undisputed
- 3 - that the petitioner has almost completed substantial part of the work and has submitted 23 RA bills. The petitioner contends that the respondents, while disbursing the amount towards the RA bills, are deducting a sum of 18% unilaterally attributed towards the GST payable and this would be impermissible.
Sri. D.R.Ravishankar, the learned Senior counsel for the petitioner, submits that the petitioner has submitted, as required, bid based on the Schedule of Rates (SR) notified for North Zone, Dharwad and it is indisputable that the SR rates would include the prevailing market rates inclusive of taxes, duties, lead, loading and unloading charges. The SR rates are notified on 25.11.2016, and because it is inclusive of the taxes as of the date of the notification of such rates, the respondents must pay any difference in the tax rates consequent to change
- 4 - in indirect tax regime and there cannot be unilateral change of the RA bills with the respondents attributing 18% of the RA bill amounts towards GST.
Sri. D.R.Ravishankar canvasses that the controversy between the parties must be examined in the light of the decision of the Hon'ble Supreme Court - 5 - agreeing that the rates quoted shall be deemed to be inclusive of the tax that will have to be paid for the purpose of the contract and the second respondent will deduct tax at source as per applicable law; the petitioner having so agreed, cannot now contend that the tax dues cannot be deducted from the RA bills or that any amount over and above the amount mentioned therein must be paid.
There is no dispute that the petitioner has submitted bids based on the SR rates notified on 25.11.2016 and these rates included tax as was applicable under the provisions of Indirect Tax Regime. Crucially, as pointed out by Sri. S.Mahesh, the petitioner has signed the subject agreement specifically agreeing to the second respondent deducting taxes at source as per applicable law. The intent of the parties in signing the contract including the terms as aforesaid, even before it could be opined that the term will include any upward variation in the
- 6 - tax rates, will have to be examined in the back drop of the evidence that will be brought on record to substantiate the intent as respectively claimed by them. There cannot be any directions in the absence of such evidence. The parties have agreed to resolve the disputes through arbitration and therefore, this Court is of the considered view that all questions must be left open to be decided in the arbitral proceedings, if the petitioner proposes to have recourse to such remedy. As such, the petition stands disposed of accordingly. JUDGE
RB
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.