The Braithwaite Burn And Jessop vs. The East Central Railway And Ors

Held

The High Court noted that the issues raised in the present writ petition had already been decided by a Division Bench of the same Court. This decision was rendered on 21.05.2010 in C.W.J.C. No. 9885 of 2008 and other analogous matters. Consequently, the present writ petition was disposed of in the same terms as the aforementioned earlier judgment. The specific findings and reasoning of the earlier Division Bench, which form the ratio decidendi for this case, are not detailed in this judgment. The operative directions would be to follow the outcome of the earlier decision.

Facts

The petitioner, Braithwaite Burn & Jessop Construction Limited, a Government of India undertaking, filed a writ petition before the Patna High Court. The petition challenged Section 41 of the Bihar VAT Act, 2005, and Rule 29 of the Bihar VAT Rules, 2005. The petitioner sought a declaration that these provisions were ultra vires the Constitution of India. Specifically, the petitioner argued that Section 41, which allows for the deduction of advance tax on works contractor bills without providing for input tax credit or set-off of entry tax on goods used in works contracts, was unconstitutional. Rule 29 was challenged for not providing a mechanism to exclude tax paid on goods used in works contracts. The petitioner also sought a mandamus directing the respondents, including East Central Railway and the State of Bihar's Commercial Taxes Department, to cease deducting advance tax and to refund illegally deducted amounts.

Key Issues

1. Whether Section 41 of the Bihar VAT Act, 2005, which permits the deduction of advance tax on works contractor bills without allowing for input tax credit or set-off of entry tax on goods used in works contracts, is ultra vires the Constitution of India? 2. Whether Rule 29 of the Bihar VAT Rules, 2005, is ultra vires for failing to provide a mechanism to exclude the amount of tax paid by a works contractor for goods used in the execution of a works contract? The petitioner contended that Section 41 and Rule 29 were unconstitutional. They argued that the deduction of advance tax without accounting for input tax credit or entry tax paid on materials used in works contracts led to double taxation and was arbitrary. The petitioner sought a declaration that these provisions were void and a mandamus for the refund of illegally deducted taxes. The judgment does not record specific arguments from the respondents.