The Chief Engineer vs. Subaya Constructions Company Limited

Facts

The writ petitioner, Subaya Constructions Company Limited, entered into a contract with the TWAD Board (appellants) in 2016 for sewerage works, which included a sales tax component. Following the introduction of GST on July 1, 2017, the tax portion of the contract needed revision. The Government issued G.O.Ms.No.296 on October 9, 2017, to address this. The petitioner's request for reconsideration was not addressed, leading to a writ petition seeking a mandamus to consider their representations and enter into a supplemental agreement for GST. The writ court allowed the petition, relying on a previous judgment involving the same petitioner and a similar issue with the Salem City Municipal Corporation. The TWAD Board appealed this decision.

Held

The Court held that the writ court rightly placed reliance on the order dated August 1, 2019, passed in W.P.Nos.21196 and 21198 of 2019. The reasoning was that this order, involving the same petitioner and a similar issue, had attained finality and was not challenged. The Court found no reason to exempt the TWAD Board, a State Government entity, from this binding order simply because it was a Board and not a Corporation. Regarding the supplementary agreement, the Court noted that the petitioner had raised objections on the same date as signing the agreement and followed up with several subsequent letters, which were not denied by the appellants. Therefore, the writ court rightly considered the cumulative circumstances. The Court acknowledged that the petitioner might have been paid over and above the actual GST, but directed the parties to work out the amounts as per the writ court's directions and arrive at a consensus. The writ appeal was dismissed.

Key Issues

1. Whether the writ court erred in relying on the order dated August 1, 2019, passed in W.P.Nos.21196 and 21198 of 2019, which was a consent order involving another department, for the present case against the TWAD Board. 2. Whether the writ petitioner is bound by the supplementary agreement dated May 24, 2018, and should not be allowed to raise objections. Petitioner's arguments (implied from the writ court's reliance and the judgment's reasoning): The petitioner argued that the introduction of GST necessitated a revision of the contract tax component. They relied on G.O.Ms.No.296 and the precedent set by the earlier judgment in W.P.Nos.21196 and 21198 of 2019, which directed parties to quantify GST based on specific paragraphs of the Government Order. They contended that the TWAD Board, as a State Government entity, should be bound by this order, especially since their subsequent representations were not addressed. Appellants' (TWAD Board) arguments: The appellants contended that the writ petition was filed to circumvent GST issues and potential interest on non-payment. They claimed to have remitted the GST component deducted at 2% and had no dues. They argued that the writ court erred in blindly applying the consent order from a different department and that the petitioner was bound by the supplementary agreement dated May 24, 2018, which had a binding effect.