IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 22ND OCTOBER 2008 / 30TH ASWINA 1930 WP(C).No. 12171 of 2004(Y) -------------------------- PETITIONER(S): --------------- M/S. RAJA TRANSPORTS, TRANSPORT CONTRACTORS, TRICHY MAIN ROAD, ARIYALUR, REPRESENTED BY ITS PARTNER A. HYDER ALI. BY ADV. SRI.K.JAJU BABU SMT.M.U.VIJAYALAKSHMI RESPONDENT(S): --------------- 1. UNION OF INDIA, REPRESENTED BY SECRETARY TO GOVERNMENT, FINANCE DEPARTMENT, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL SECRETARIAT, NEW DELHI. 2. THE COMMISSIONER OF CENTRAL EXCISE, C.R.BUILDINGS, I.S.PRESS ROAD, COCHIN-18 3. M/S. MALABAR CEMENTS LTD., WALAYAR P.O., PALAKKAD, REPRESENTED BY ITS MANAGING DIRECTOR. ADV. SRI.DINESH R.SHENOY, ADDL.CGSC FOR R1,2 SRI.B.S.KRISHNAN (SR.) FOR R3 SRI.K.ANAND (A.201) FOR R3 SMT.LATHA KRISHNAN FOR R3 SRI.CYRIAC KURIAN, CGSC FOR R1 TO 3 SRI. JOHN VARGHESE, S.C. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PETITIONER'S EXHIBITS: W.P.C.NO. 12171/2004. ------------------------------------------------------------------- EXT.P1 TRUE COPY OF WORK ORDER DT. 17-10-1997. EXT.P2 OBJECTION DT. 3-2-1998. EXT.P3 LETTER DT. 14-3-1998. EXT.P4 JUDGMENT IN O.P.NO. 4335/1998. EXT.P5 NOTICE DT. 14-8-2003. EXT.P6 OBJECTION DT. 29-8-2003. EXT.P7 LETTER DT. 15-10-2003. EXT.P8 AMENDMENT ACT 32 OF 1994. [TRUE COPY] P.S TO JUDGE. S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= W. P (C) No. 12171 of 2004 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 22nd October, 2008. J U D G M E N T The petitioner is a transporting contractor. They executed certain works on behalf of the 3rd respondent Company, which is a Government Company. In respect of the said service, service tax was originally demanded. This Court set aside that demand. The matter went up to the Supreme Court and the judgment of this Court was confirmed. However, in the meanwhile, the statute was amended with retrospective effect by which service tax became payable in respect of the service provided by the petitioner to the 3rd respondent. The 3rd respondent paid the service tax to the 2nd respondent. However, by Exts.P. 5 and P7, the 3rd respondent deducted the service tax paid by them to the 2nd respondent from the petitioner. The petitioner is challenging Exts.P 5 and P7 demands and seeking the following reliefs: “i) Issue a writ of certiorari or other appropriate writ, order or direction, calling for the records leading to Exts.P 5 and P7 and quash the same; ii) issue a writ of mandamus or other appropriate writ, order or direction, directing the 3rd respondent to refund the amount recovered from the petitioner as per Exts.P 5 and P7 with interest forthwith; iii) declare that as per Ext. P8 the petitioner is not liable to pay the Service Tax demanded as per Exts.P 5 and P7.” 2. The contention of the petitioner is that the liability to pay service tax is squarely on the 3rd respondent and therefore without a contract enabling them to deduct that liability from the petitioner, the same cannot be recovered from the petitioner. The petitioner points out that in Ext. P1 contract, there is no such provision for recovery of service tax from the petitioner. That being so, there is no contract between the petitioner and the 3rd respondent enabling the 3rd respondent to recover the service tax paid by them from the W.P.C. No. 12171/2004 -: 2 :- petitioner, is the contention raised. 3. The 2nd respondent has filed a counter affidavit in which it is categorically stated that the liability to pay service tax is squarely on the 3rd respondent. This is not disputed by the 3rd respondent also. What the 3rd respondent submits is that earlier also, the amounts were deducted from the petitioner which the petitioner paid and therefore the petitioner cannot now raise a dispute in regard to subsequent deductions also. The second contention is that as per the contract, although there is no specific condition therein, the 3rd respondent has a right to recover service tax from the petitioner. 4. I have considered the rival contentions in detail. 5. As I have already stated, the 2nd respondent has stated that the liability to pay service tax is clearly on the 3rd respondent which the 3rd respondent does not dispute. Statutory liabilities due from a party to a contract cannot be recovered from the other party to the contract unless the terms of the contract specifically authorise that party to the contract to do so. Here, admittedly, Ext. P1 is the terms of the contract, which does not provide for recovery of service tax from the petitioner. Therefore, the contention that as per the contract, the 3rd respondent can recover service tax from the petitioner cannot be sustained. 6. So far as the other contention is concerned, the petitioner had in fact objected to the recovery by Ext. P2. Of course, by Ext. P3, the 3rd respondent had reiterated their right to recover service tax from the petitioner. But, counsel for the petitioner points out that in Ext. P3, it is specifically stated that there is a stay by the High Court which is the reason cited for refusing to refund the same. Whatever that be, in so far as there is no estoppel in the matter, the petitioner cannot be prevented from seeking refund of the amount illegally W.P.C. No. 12171/2004 -: 3 :- collected from them. In the above circumstances, I do not find any merit in the contentions raised by the 3rd respondent. That being so, the petitioner is entitled to refund of the amounts recovered from them as service tax by the 3rd respondent, which is their liability. Accordingly, there would be a direction to the 3rd respondent to refund the amounts covered by Exts.P 5 and P7 to the petitioner within two months from the date of receipt of a copy of this judgment. Counsel for the petitioner prays for a direction to pay interest also. I am not inclined to direct payment of interest in the peculiar facts and circumstances of the case. The writ petition is allowed as above. S. Siri Jagan, Judge. Tds/