Sri Nimai Kar vs. The State Of Tripura And Ors.

Held

The Court held that the petitioner is entitled to reimbursement of the taxes paid. The Court found that the respondents' argument that the writ petition was not maintainable due to the contractual nature of the dispute was untenable, as there were no disputed questions of fact, only the interpretation of contractual clauses. The Court relied on Supreme Court precedents (ABL International Ltd. and Unitech Limited) and its own prior judgments (Sri Ratan Sarkar) to establish that a writ petition under Article 226 is maintainable when the State acts arbitrarily in contractual matters. The Court further held that Clause 42.1 of the agreement, which stipulated reimbursement of taxes paid by the contractor on proof of payment, was binding on the respondents, irrespective of the absence of 'Part-II' of Schedule-A. The Court noted that the respondents had previously been held liable for reimbursement in similar contractual disputes, with such decisions being affirmed by higher courts. The petitioner had paid a total of Rs. 2,21,48,746.08/- as CGST/SGST, which the respondents had not disputed. Therefore, the respondents were directed to reimburse this amount to the petitioner, along with interest at 12% per annum from the respective dates of payment made by the petitioner. The payment was to be made within three months of the judgment's receipt.

Facts

The petitioner, a government contractor, participated in a tender issued by the Public Works Department (PWD) of Tripura in March 2017. At that time, the applicable tax regime was the Tripura Value Added Tax (TVAT) Act, 2004, which levied 6% VAT on works contracts. The petitioner quoted rates considering this tax liability. However, the TVAT Act was repealed effective July 1, 2017, and replaced by the Central Goods and Services Tax (CGST) Act, 2017, and the Tripura State Goods and Services Tax (TSGST) Act, 2017, increasing the applicable tax to 12%. The petitioner informed the PWD in November 2017 that he could not execute the work at the previously quoted rates due to the increased tax liability and would not bear the additional tax burden. While a work order was issued acknowledging this letter, the subsequent formal agreement dated November 24, 2017, did not explicitly mention the petitioner's contention regarding the tax rate. Despite this, the PWD continued to deduct 12% tax from the petitioner's bills instead of the initially quoted 6%. The petitioner sought reimbursement of the excess tax paid.

Key Issues

1. Whether the petitioner is entitled to reimbursement of the difference between the 12% GST deducted and the 6% VAT originally quoted, based on the correspondence and agreement clauses, despite the change in tax regime? (Question of mixed law and fact, turning on interpretation of contract clauses and correspondence). Petitioner's Arguments: - The petitioner argued that his letter dated November 4, 2017, stating his inability to bear the increased tax liability and his intention to pay only 6% tax, was implicitly accepted by the respondents, as evidenced by the work order acknowledging this letter and a subsequent communication from the Additional Chief Engineer. - He contended that Clause 42.1 of the agreement, which promised reimbursement of taxes paid by the contractor on proof of payment, should be applied, even in the absence of 'Part-II' of Schedule-A. - The petitioner relied on the principle that the State has a duty to act fairly and not arbitrarily, even in contractual matters, citing Supreme Court judgments like ABL International Ltd. and Unitech Limited. Respondents' Arguments: - The respondents argued that the dispute arose from a contract and therefore, the writ jurisdiction under Article 226 of the Constitution was not maintainable. - They also contended that the absence of 'Part-II' of Schedule-A, as referenced in Clause 42.1, absolved them of the obligation to reimburse taxes.