M/S. Bansal Construction Co. vs. Union Of INDIA
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The petitioner, M/s. Shree Ganpati Construction, filed a writ petition challenging recovery orders dated March 16, 2018, issued by Rajasthan Cooperative Dairy Federation Ltd. (respondent Nos. 2 and 3). The petitioner sought to set aside these orders, release payments for work done and security deposit, and award interest for illegal retention. The petitioner argued that respondents 2 and 3, registered under the Societies Registration Act, 1860, and not as 'corporate bodies', were not covered by Section 68 of the Finance Act, 1994, and thus could not make the recovery. The respondents contended that Clause 36C of the agreement obligated the petitioner to pay sales tax and other taxes. The contract was for construction work, and respondents sought service tax from the petitioner based on this clause.
Held
The Court held that the petitioner had entered into the contract-agreement with open eyes, implying acceptance of its terms. Regarding the first issue, while the petitioner argued about the definition of 'corporate body' and the applicability of Section 68 of the Finance Act, 1994, the Court did not directly address this point in its reasoning. Instead, it focused on the contractual obligation. The Court found that the respondents were entitled to collect service tax from the petitioner based on Clause 36C of the agreement. The Court also addressed the petitioner's submission regarding the lack of a show-cause notice, stating that such a notice was not required when there was a specific clause in the agreement for the payment of service tax by the petitioner. Consequently, the Court found no grounds for interference and dismissed the writ petitions.
Key Issues
1. Whether the respondent Nos. 2 and 3, being registered under the Societies Registration Act, 1860, and not as 'corporate bodies', are covered by Section 68 of the Finance Act, 1994, for the purpose of making recovery? - Petitioner's argument: The petitioner contended that respondents 2 and 3 do not fall under the definition of a 'business entity registered as a corporate body' and are registered under the Societies Registration Act, 1860, thus Section 68 of the Finance Act, 1994, is not applicable for recovery. - Revenue/State's argument: The respondents argued that Clause 36C of the agreement between the petitioner and respondents 2 and 3 makes the petitioner liable to pay sales tax and other taxes. 2. Whether a show-cause notice was required before issuing the recovery order, given the contractual clause for payment of service tax? - Petitioner's argument: The petitioner submitted that recovery was made without issuing a show-cause notice. - Revenue/State's argument: The respondents did not explicitly address the necessity of a show-cause notice in their arguments presented in the judgment.
Sections Cited
Section 68
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
Order 12/02/2026
This writ petition has been filed by the petitioner with the following prayers:- “a) to issue an appropriate Writ, order or direction to set aside, quash and drop the impugned ex-parte recovery order 18/52612-14 DATED NO.RCDF/PROJ./C-4034- 11/2017-16.3.2018 AND ORDER NO.RCDF/PROJ./C- 4034-11/2017-18/52603-05 DATED 16.03.2018 and subsequent consequential proceedings for recovery of dues against the outstanding bills and security deposit. b) to issue an appropriate Writ, order or direction to direct the respondents to release the payment towards the work order and release the security deposit as the work has been successfully performed. (c) to issue an appropriate Writ, order or direction for awarding appropriate interest and cost towards the illegal retention and harassment cause to the petitioner as deem fit by the Hon'ble Court.
[2026:RJ-JP:6749-DB] (3 of 4) [CW-11294/2018] d) pass any such other order or orders as may be deemed fit by this Hon'ble Court in the facts and circumstances of the case in the favour of the petitioner.”
Learned counsel for the petitioner submitted that the respondents have no right to issue the recovery order dated 16.03.2018. Learned counsel submits that in view of Section 68 of the Finance Act of 1994 the respondents cannot make any recovery because the respondent Nos.2 and 3 are not covered under the definition of business entity registered as ‘corporate body’ and the same has been registered under the Societies Registration Act, 1860. 3. Learned counsel for the respondent Nos.2 and 3 opposed the submissions and submitted that as per Clause 36C of the agreement entered into between the petitioner and the respondent Nos.2 and 3, the petitioner is liable to pay sale tax and other taxes.
Admittedly, the contract was awarded to the petitioner for construction of building, etc. and the respondents issued notice to pay the service tax, which they have been entitled to collect from the petitioner in view of Clause 36C of the agreement.
Learned counsel for the petitioner submits that the recovery has been made without issuance of the show-cause notice. In our considered view issuance of show-cause notice is not required when there is a specific Clause in the agreement for payment of service tax by the petitioner.
[2026:RJ-JP:6749-DB] (4 of 4) [CW-11294/2018]
Since, the petitioner has signed the contract-agreement with his open eyes, no case is made out for interference. Hence, these writ petitions are dismissed. (RAVI CHIRANIA),J (INDERJEET SINGH),J Dushyant/63-64
Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.