Tpc Infra And Green Energies vs. Principal Secretary

Held

The Court held that the tax liability ought to be borne by the 4th respondent. This decision was based on the reasoning that the contract price, as agreed upon between the petitioner and the 4th respondent, inherently included a tax component. The Court followed the precedent set in the case of Subaya Constructions Company Vs. Tamil Nadu Water Supply and Drainage Board, where a similar issue was addressed. In that case, the Court had directed the respondent Board to calculate the tax component within the contract price and rework the same. The Court reiterated the principle that the tax liability should not be saddled on the petitioner, especially when the contract price was inclusive of such a component. The operative direction issued by the Court is to direct the 4th respondent to rework the terms of the contract and enter into a revised agreement with the petitioner, which shall be completed within eight weeks from the date of receipt of a copy of the order. The issue of whether the GST was correctly calculated or if any specific provisions of the GST Act were violated was not expressly decided, as the matter was resolved by directing a rework of the contract.

Facts

The petitioner, TPC Infra and Green Energies, undertook works based on work orders issued by the 4th respondent, the Divisional Engineer (H), Highways C and M Division, Tirupur, during 2017. The petitioner received Rs. 6,80,53,046/- after tax deduction at source. The 3rd respondent, the Deputy Director, Directorate General of GST Intelligence, conducted an investigation and issued a show cause notice dated 29.06.2022, demanding CGST of Rs. 43,36,106/- and SGST of Rs. 43,36,106/-, totaling Rs. 92,72,213/-, on the grounds that the services rendered attracted GST. The petitioner notified the 4th respondent to pay this amount, but received no response, leading to the filing of this writ petition seeking a Mandamus to direct the 4th respondent to pay the demanded GST.

Key Issues

1. Whether the 4th respondent, as the issuer of work orders, is liable to bear the GST component of the contract price, considering the petitioner's contention that the contract price included cost, profit, and tax, and that the tax liability should be borne by the respondent Board? (Mixed question of law and fact, concerning contract interpretation and GST liability). Petitioner's Arguments: The petitioner argued that when they entered into the agreement with the 4th respondent, the contract price comprised three components: cost factor, profit margin, and tax component. They contended that the tax liability should be borne by the respondent Board (4th respondent in this case) and that they should not be saddled with the tax liability. They relied on the principle that the tax component is part of the overall consideration agreed upon. Revenue/State's Arguments: The judgment does not record any specific arguments made by the revenue or state respondents regarding their stance on the tax liability. The focus of the court's decision was on the precedent set by a previous case.