03 June 2013
Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, (2012) 5 SCC 306 Taxation Indirect taxes Shifting of burden of tax liability by contract from statutory assessee to another party - Permissibility - Held, nothing in law prevents a statutory assessee from entering into agreement with another party (promisor) that burden of any indirect tax arising out of obligations of promisor under contract would be borne by promisor - Indirect tax provisions do not determine rights and liabilities between contracting parties as agreed in contract between them - Service tax being an indirect tax, held, it can be passed on to another party by entering into contract, even though he is not the assessee under the statute - Cl. 9.3 of agreement stipulating that respondent contractor would bear and pay all taxes, duties and other liabilities in connection with discharge of his obligations under contract - Appellant employer deducting service tax on services of contractor from 30-11-1997 to 6-8-1999, during which period respondent contractor was assessee under service tax provisions - However, after Amendment Act of 2000, in view of changed definition of assessee (with retrospective effect) appellant became statutory assessee - Since respondent contractor disputed deduction of service tax from point when appellant became statutory assessee, dispute referred to arbitration - Arbitrator held that under terms of contract appellant was right in deducting service tax from bills of respondent as clearing and forwarding contractor even after the amendment - Respondent contending that appellant employer as assessee (in view of Amendment Act of 2000) being receiver of services was liable to pay service tax and said burden could not be shifted on to contractor - Sustainability - Held, position of parties as to liability to pay service tax is exactly the same as prior to and after passing of Amendment Act of 2000 in view of Cl. 9.3, though appellant became statutory assessee after amendment - Rationale behind Cl. 9.3 of agreement was that appellant should be exposed to known and determined liability under said contract, and liability for all taxes arising out of obligations of contractor were assumed by contractor - Hence, held, respondent as contractor is liable to bear service tax in discharge of his obligations under said contract under Cl. 9.3 of terms of agreement, (2012) 5 SCC 306-A Arbitration Arbitration and Conciliation Act, 1996 S. 34 - Interpretation of contract by arbitrator - Scope of Interference by court - Held, if view taken by arbitrator is possible one, it cannot be subjected to judicial review even if contract is capable of two interpretations, (2012) 5 SCC 306-B Service Tax Liability to Pay Tax Service tax being an indirect tax, held, it can be passed on to third party - Hence, assessee can certainly enter into contract to shift its liability of service tax, (2012) 5 SCC 306-C Contract and Specific Relief Construction/Interpretation of Contract Doctrine of contra proferentem - Application of - Held, where a clause exists in commercial contract mutually agreed upon by parties, principle of contra proferentem is not applicable, (2012) 5 SCC 306-
CAclubindia
