IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 14TH JULY 2010 / 23RD ASHADHA 1932 WP(C).No. 16790 of 2007(W) -------------------------- PETITIONER(S): --------------- C.SADANANDAN, KOLLARAKKAL HOUSE, P.O.ELATHUR, CALICUT-673 303. BY ADV. SRI.M.V.BOSE SRI.VINOD MADHAVAN SMT.NISHA BOSE RESPONDENTS: --------------- 1. AIRPORT DIRECTOR, AIRPORTS AUTHORITY OF INDIA, CALICUT INTERNATIONAL AIRPORT, CALICUT-673 647. 2. THE DEPUTY GENERAL MANAGER, TM/COMML, CALICUT INTERNATIONAL AIRPORT, CALICUT-673 647. 3. THE SUPERINTENDENT OF CONTROL EXCISE RANGE RAMANATTUKARA, RAMANATTUKARA, KOZHIKODE. ADDL. RESPONDENT: 4. THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, CALICUT DIVISION, C.R.BUILDING, MANANCHIRA, CALICUT-673 001. (ADDL. RESPONDENT IS IMPLEADED VIDE ORDER DT.29.9.2009 IN I.A. NO.11835/2009.) ADV. SRI.N.N.SUGUNAPALAN, SENIOR ADVOCATE FOR R1,2&3 SRI.S.SUJIN ADV. SRI.JOHN VARGHESE,SC,CEN.BOARD OF EXCIS FOR R3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14/07/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: P1: TRUE COPY OF AWARD LETTER DT.10.1.2002. P2: TRUE COPY OF COMMUNICATION ISSUED BY THE CHIEF MANAGER OF THE KONDOTTY BRANCH OF STATE BANK OF TRAVANCORE. P3: TRUE COPY OF COMMUNICATION DT.30.1.2007 ISSUED BY THE RESPONDENT. P4: TRUE COPY OF LETTER OF AMENDMENT DT.22.1.2002. P5: TRUE COPY OF WRITTEN SUBMISSION DT.30.11.2005, MADE BY PETITIONER BEFORE THE NEGOTIATION COMMITTEE. P6: TRUE COPY OF COMMUNICATION DT.1.12.2005 ISSUED BY R2 INTIMATING CLOSURE OF VISITORS GALLERY. P7: TRUE COPY OF LETTER DT.21.7.2006 ISSUED BY R2. P8: TRUE COPY OF LETTER DT.15.3.2005 ISSUED BY R. P9: TRUE COPY OF CHALAN DT.4.7.2005 ISSUED FOR REMITTANCE OF SERVICE TAX. P10: .DO. DT.5.10.2006 .DO. P11: TRUE COPY OF CERTIFICATE DT.17.11.2006 ISSUED BY THE SUPERINTENDENT OF CENTRAL EXCISE, RAMANATTUKARA RANGE, KOZHIKODE. P12: TRUE COPY OF RELEVANT PAGE OF REPLY DT.9.5.2007 ISSUED BY GENERAL MANAGER (PR) OF PUBLIC INFORMATION OFFICER. P13: TRUE COPY OF LETTER DT.21.5.2007, ISSUED TO PETITIONER. P14: TRUE COPY OF COMMUNICATION DT.29.5.2007. P15: TRUE COPY OF RELEVANT PAGE OF TENDER NOTIFICATION. P16: TRUE COPY OF ORDER DT.4.12.2006 IN WPC 31810/2006. P17: TRUE COPY OF INFORMATION SOUGHT UNDER THE RIGHT TO INFORMATION ACT 2005, DT.5.3.2008 (PRODUCED ALONGWITH IA 5325/09). P18: TRUE COPY OF REPRESENTATION FROM THE PETITIONER DT.25.3.2003 BEFORE R1. (PRODUCED ALONG WITH I.A.5325/07.) P19: TRUE COPY OF REPLY LETTER DT.5.3.2007 FROM THE PETITIONER TO R3. (PRODUCED ALONG WITH ADDL. REPLY AFFIDAVIT DT.22.6.2009.) P20: TRUE COPY OF NOTICE DT.28.2.2007 OF R3 TO THE PETITIONER (PRODUCED ALONG WITH ADDL. REPLY AFFIDAVIT DT.22.6.2009.) P21: TRUE COPY OF ADDL. TERMS AND CONDITIONS OF THE AGREEMENT ATTACHED TO THE TENDER FOR MANAGEMENT OF CAR PARKING FACILITY AT CALICUT AIRPORT. P22: TRUE COPY OF ORDER DT.24.6.2009 OF THE HON'BLE HIGH COURT OF KERALA. P23: TRUE COPY OF WRITTEN OBJECTION DT.7.7.09 BEFORE THE ADDL. R3 FROM THE PETITIONER. P24: TRUE COPY OF ARGUMENT NOTES DT.27.7.09 BEFORE THE AUTHORITY BY PETITIONER. P25: TRUE COPY OF ORDER DT.28.7.09 PASSED BY THE ASST. COMMISSIONER OF CENTRAL EXCISE, CALICUT DIVISION. P26: TRUE COPY OF RECEIPT (ADDED VIDE ORDER DT.11.11.09 IN I.A. 12436/09.) RESPONDENT'S EXHIBITS: R1(a): TRUE COPY OF LETTER DT.22.2.06 ISSUED BY THE CORPORATE HEAD QUARTERS OF AIRPORT AUTHORITY OF INDIA. R1(b): TRUE COPY OF LETTER DT.11.8.2006 ISSUED BY THE CORPORATE HEAD QUARTERS OF AIRPORT AUTHORITY OF INDIA. R1(c): TRUE COPY OF STATEMENT DT.28.6.2007 ISSUED BY THE CORPORATE HEAD QUARTERS OF AIRPORT AUTHORITY OF INDIA. TRUE COPY PS TO JUDGE C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... W.P.(C) No.16790 of 2007 .................................................................... Dated this the 14th day of July, 2010. JUDGMENT Ramachandran Nair, J. The petitioner is a contractor licensed by the first respondent for collection of admission fee in the Airport from visitors of the Kozhikode Airport. The contract was for a period commencing from 10.1.2002 to 17.1.2007. During the currency of the contract Central Government introduced service tax on Airport services from 10.9.2004 onwards. There appears to be some confusion with regard to recovery and payment for some time. However, vide Ext.P8 letter the first respondent directed the petitioner to start collection and remittance of service tax on the services rendered by him. The petitioner took registration and started remitting tax from 1.4.2005 and the same continued till 17.1.2007 i.e. till the expiry of the contract. However, arrears remained unpaid from 10.9.2004 to 31.3.2005. According to the petitioner, liability for this period in terms of instruction of the first respondent which is Rs.2,07,184/-, was also remitted by petitioner to the first respondent, who in turn claims to the petitioner that they have remitted to the department. After end of the contract period, the first respondent again notified to conduct auction to license out the business of collection of admission charges. A non-liability certificate was required for participating in the tender. When the petitioner approached the first respondent, they served Ext.P14 demand on the first respondent for a total sum of Rs.30,93,064/-, out of which Rs.9,72,240/- represent balance licence fee payable to the first respondent and balance Rs.21,20,824/- represent the service tax claimed by the first respondent as payable to the department and recoverable from the petitioner. Even though petitioner filed Writ Petition challenging the demand raised vide Ext.P14, this court passed interim order on 4.6.2007. The prayer of the petitioner to get back the Bank Guarantees furnished for huge amounts from the first respondent was allowed by this court on condition of petitioner furnishing Deposit Receipts from the Bank for the amount demanded by the first respondent vide Ext.P14. Pursuant to the interim order of this court dated 4.6.2007, the petitioner addressed a letter to the first respondent agreeing to abide by the interim order issued by this court and by remitting an additional amount of Rs.8,16,500/-. It is made clear in the interim order that the payment is subject to result of the W.P.(C). In other words, as a condition for release of Bank Guarantee, the petitioner met with the entire demand raised by the first respondent vide Ext.P14. Later the first respondent reworked liability due from the petitioner under which petitioner was granted a refund of Rs.7,01,811/-. The position as of now is that the petitioner has a claim for refund of the balance amount of Rs.23 lakhs from the first respondent and this is the only issue to be considered in the W.P.(C). We have heard counsel for the petitioner, Senior counsel Sri.Sugunapalan appearing for respondents 1 and 2 and Sri.John Varghese, counsel appearing for the third respondent. 2. The petitioner has no dispute as to the amount of licence fee claimed and paid by the petitioner. However, petitioner's case is that the collection of around Rs.23 lakhs under the guise of service tax is an illegal collection by the first respondent. Counsel for the petitioner contended that in the first place, the first respondent was not called upon to pay any service tax by the departmental authorities and the claim made by them against the petitioner was without any basis. Petitioner's case is that the amount was paid under protest after obtaining interim order from this court only to get the certificate of non-liability to enable him to participate in the next tender. According to the petitioner, even now the departmental authorities have not determined liability to the extent recovered by first respondent from the petitioner and so much so, he is entitled to refund of the entire amount. We do not think we should consider the extent of service tax liability in respect of the transaction involved and the person liable because both these issues have to be determined by the competent authority in accordance with the statutory provisions. So long as no notice or assessment is under challenge before us, there is no need for us to consider this issue. The remaining question to be considered is whether the recovery of Rs.23 lakhs and odd from the petitioner by the first respondent towards service tax is justified. Admittedly there was no assessment or demand against the first respondent towards service tax by the department in respect of the transaction with the petitioner. However, first respondent contended that collection is as a precautionary measure to protect the interest of first respondent because if security is released without collecting service tax and if ultimately service tax is found payable, there will be no way to recover the service tax from the petitioner. We find force in this contention and from the conduct of the petitioner in remitting the balance amount, we feel the petitioner also agreed for payment, but under protest and subject to his claim that he is not liable and the tax itself is not payable. This court through interim orders permitted encashment of deposit receipts and released the amount to the first respondent to make payment to the department by the first respondent subject to petitioner's protest. In the circumstances, we have to necessarily hold that the remittance of tax, if any, made by the first respondent is under authorisation by the petitioner but subject to his contest about liability. However, if payment is not made by the first respondent to the Service Tax Department, then they are bound to refund the amount to the petitioner because even as of now neither the department nor the first respondent has a case that any service tax assessed in respect of petitioner's transaction is outstanding or even any proceeding is pending for assessment or demand of service tax. In the circumstances, we dispose of the W.P.(C) by directing respondents 1 and 2 either to issue receipts of payments made to the Service Tax Department or to refund the amount withheld by them to the petitioner, within a period of thirty days from the date of receipt of copy of this judgment. If amounts are paid, then it would be open to the petitioner to claim refund from the Service Tax Department in accordance with the provisions of the Finance Act, 1994 and Rules prescribed thereunder. There will be a further direction to the third respondent or the concerned authority of the Service Tax Department to treat the payment made by the first respondent as made on behalf of the petitioner treat the credit in his account and consider the claim for refund unless the concerned authority holds that liability is on the first respondent. If the liability is fastened on the first respondent and if first respondent holds that it is recoverable from the petitioner and if the matter cannot be decided by the statutory authorities under the provisions of the Finance Act, 1994 and Rules made thereunder, then it is a pure contractual issue to be decided by the civil court. We leave open the challenge against Ext.P25 or any other proceeding or order taken or yet to be taken under the Act and Rules against the petitioner or against respondents 1 and 2. W.P.(C) is disposed of as above. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms