Kerala High Court
M/S. Vriddhi Infratech India Pvt. ... vs The Executive Engineer on 13 January, 2023
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
FRIDAY, THE 13TH DAY OF JANUARY 2023 / 23RD POUSHA, 1944
WP(C) NO. 26389 OF 2022
PETITIONER:
M/S.VRIDDHI INFRATECH INDIA PVT. LTD.,
PLOT NO. 330/1, GROUND FLOOR, ROAD NO. 25, BANJARA
HILLS, HYDERABAD - 500 034, TELANGANA REPRESENTED BY
ITS VICE PRESIDENT, VENKATA RATNA PRASAD Y.
RESPONDENTS:
1 THE EXECUTIVE ENGINEER,
CENTRAL PUBLIC WORKS DEPARTMENT (CPWD),
OFFICE OF THE EXECUTIVE ENGINEER, IISER TVM PROJECT
DIVISION - I, MELETHUMELE, VATTIYOORKAVU P.O,
THIRUVANANTHAPURAM - 695 013.
2 THE DIRECTOR GENERAL,
CENTRAL PUBLIC WORKS DEPARTMENT (CPWD), A-WING,
ROOM NO.- 101 NIRMAN BHAWAN, NEW DELHI - 110 011.
3 THE CHIEF ENGINEER,
CENTRAL PUBLIC WORKS DEPARTMENT (CPWD),
C.G.O. COMPLEX, POONKULAM, VELLAYANI P.O,
THIRUVANANTHAPURAM - 695 522.
ADV.P.R.AJITH KUMAR
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
13.01.2023, ALONG WITH WP(C).25732/2022, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
WP(C) NOS. 26389 & 25732 OF 2022
2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
FRIDAY, THE 13TH DAY OF JANUARY 2023 / 23RD POUSHA, 1944
WP(C) NO. 25732 OF 2022
PETITIONER:
M/S. VRIDDHI INFRATECH INDIA PVT. LTD.,
PLOT NO. 330/1, GROUND FLOOR, ROAD NO. 25,
BANJARA HILLS, HYDERABAD - 500 034, TELANGANA
REPRESENTED BY ITS VICE PRESIDENT, VENKATA RATNA
PRASAD Y.
RESPONDENTS:
1 THE EXECUTIVE ENGINEER,
CENTRAL PUBLIC WORKS DEPARTMENT (CPWD),
OFFICE OF THE EXECUTIVE ENGINEER, IISER TVM
PROJECT DIVISION - I, MELETHUMELE, VATTIYOORKAVU
P.O, THIRUVANANTHAPURAM - 695 013.
2 THE DIRECTOR GENERAL,
CENTRAL PUBLIC WORKS DEPARTMENT (CPWD), A-WING,
ROOM NO.- 101 NIRMAN BHAWAN, NEW DELHI - 110 011.
3 THE CHIEF ENGINEER,
CENTRAL PUBLIC WORKS DEPARTMENT (CPWD), C.G.O.
COMPLEX, POONKULAM, VELLAYANI P.O,
THIRUVANANTHAPURAM - 695 522.
ADV.P.R.AJITH KUMAR
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 13.01.2023, ALONG WITH WP(C).26389/2022, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) NOS. 26389 & 25732 OF 2022
3
JUDGMENT
The petitioner in these cases submitted tenders for certain
works of the Central Public Works Department. The tenders were
invited and submitted in the pre GST regime. However, the works
were completed in the post GST regime. The Central Public
Works Department had agreed that there will be a compensation
with regard to the GST component over and above the amount
for which the work was tendered subject however to the
condition that the taxes which form the part of quoted amount
by the contractor [Taxes later subsumed in GST] would be
reduced from the quoted amount to arrive at the base amount
for determining the amount of GST compensation to be paid to
the contractor.
2. The dispute in these cases appear to center around
the fact that the petitioner claims that in so far as the petitioner
is concerned, the Department has, while arriving at the base
price for determining the GST compensation, reduced the
component of VAT on the materials and also another 3% on the
entire works contract. According to the learned counsel for the
petitioner, there is no basis for reducing a further 3% after
having deduced the VAT component in respect of the materials
WP(C) NOS. 26389 & 25732 OF 2022
which went into the completion of the work for the Central Public
Works Department.
3. The learned counsel appearing for the Central Public
Works Department would refer to Rule 10 of the Kerala Value
Added Tax Rules to state that apart from the amounts actually
paid by the contractor as VAT for the materials purchased by him
to be incorporated in the works contract, certain other
components would also form part of his taxable turnover and
therefore, that component has also to be reduced for the
purpose of arriving at the base figure upon which GST
compensation would be paid. It is submitted that since the
petitioner was adopting the regular assessment method rather
than following the composition scheme for the purpose of
discharging taxes on works contract, a methodology had to be
arrived at to determine the base price and therefore, there is
absolutely nothing illegal in the calculation adopted in these
cases. It is also pointed out that if the petitioner has any further
grievance, it is for the petitioner to have the claims adjudicated
in arbitration proceedings as contemplated by the agreement.
4. Having head the learned counsel appearing for the
petitioner in these cases and the learned counsel appearing for
the Central Public Works Department, prima facie I am of the
WP(C) NOS. 26389 & 25732 OF 2022
view that an additional deduction of 3% over and above the
actual VAT component on the materials which were deducted
from the amount quoted by the contractor for the work might not
be proper. While there is merit in the contention taken by the
learned counsel for the Central Public Works Department that
there are certain other components of VAT other than the VAT on
materials which have been factored by the contractor while
quoting for the work, there appears to be no basis for deducting
a further 3% without determining what would be the amount of
VAT liability that would have to be met by the contractor and
which was subsumed in the amount quoted by the contractor for
the work. I am therefore of the view that the matter requires
reconsideration at the hands of the 2nd respondent. Accordingly,
Ext.P7 in both the above writ petitions are quashed and the
matter is remitted to the 2nd respondent for fresh consideration
after taking into account the observations contained in this
judgment. The 2nd respondent shall take a decision after
affording an opportunity of hearing to the petitioner or its
authorized representative. I make it clear that I have not
expressed any opinion on the merits of the matter and any
observation in this judgment is not to be seen as a finding on any
point.
WP(C) NOS. 26389 & 25732 OF 2022
The writ petition will stand disposed of as above.
Sd/-
GOPINATH P.
JUDGE
DK
WP(C) NOS. 26389 & 25732 OF 2022
APPENDIX OF WP(C) 25732/2022
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF THE WORK ORDER DATED
09/08/2017
Exhibit P2 TRUE COPY OF THE OFFICE MEMORANDUM DATED
04/12/2017
Exhibit P3 TRUE COPY OF THE OFFICE MEMORANDUM DATED
06/02/2020
Exhibit P4 TRUE COPY OF THE OM DATED 29/09/2020
Exhibit P5 TRUE COPY OF THE MODEL CALCULATION
PINPOINTING THE ARITHMETICAL MISTAKE IN
THE EXHIBIT P4 OM CALCULATION SHEET
Exhibit P6 TRUE COPY OF THE JUDGMENT DATED
17/02/2022 IN W.P(C) NO. 5328/2022
Exhibit P7 TRUE COPY OF THE SPEAKING ORDER DATED
27/05/2022 ISSUED BY THE 2ND RESPONDENT
Exhibit P8 TRUE COPY OF THE OFFICE MEMORANDUM DATED
27/05/2022 ALONG WITH MODEL CALCULATION
Exhibit P9 TRUE COPY OF THE LIABILITY CERTIFICATE
(FORM IEE) ISSUED BY THE COMMERCIAL TAX
DEPARTMENT TO THE PETITIONER
Exhibit P10 TRUE COPY OF THE LETTER DATED 02/06/2022
SUBMITTED BY THE PETITIONER ALONG WITH A
COPY OF ONE SAMPLE BILL
Exhibit P11 TRUE COPY OF THE LETTER DATED 07/07/2022
Exhibit P12 TRUE COPY OF THE REPRESENTATION DATED
18/07/2022 ISSUED BY THE PETITIONER TO
THE 1ST RESPONDENT
Exhibit P13 TRUE COPY OF THE LETTER DATED 20/07/2022
ISSUED BY THE 2ND RESPONDENT TO THE
WP(C) NOS. 26389 & 25732 OF 2022
PETITIONER
RESPONDENT EXHIBITS
EXHIBIT R1(1) TRUE COPY OF RELEVANT PAGES OF THE
AGREEMENT NO.01/CPM/EE/IISERTVMPD-
II/2017-18 DATED 22.08.2017.
EXHIBIT R1(2) TRUE COPY OF THE SANCTION LETTER DATED
27-09-2018
EXHIBIT R1(3) TRUE COPY OF THE SANCTION LETTER DATED
27-08-2020
EXHIBIT R1(4) TRUE COPY OF THE SANCTION LETTER DATED
20-10-2021
EXHIBIT R1(5) TRUE COPY OF THE SANCTION LETTER DATED
14-09-2022
EXHIBIT R1(6) TRUE COPY OF THE OM VIDE LETTER NO.
SE/TAS/GST/18 DATED 27.05.2022
EXHIBIT R1(7) TRUE COPY OF THE LETTER DATED 04-11-2022
ISSUED BY THE PETITIONER REQUESTING THE
RESPONDENTS TO APPOINT SOLE ARBITRATOR
EXHIBIT R1(8) TRUE COPY OF THE 36TH RUNNING ACCOUNT
BILL
EXHIBIT R1(9) TRUE COPY OF THE MEMORANDUM OF PAYMENT
OF BILL OF RS 46,13,404/-
EXHIBIT R1(10) RUE COPY OF THE MEMORANDUM OF PAYMENT OF
BILL OF RS 9,18,314/-
EXHIBIT R1(11) RUE COPY OF THE MEMORANDUM OF PAYMENT OF
BILL OF RS -23,49,701/-
EXHIBIT R1(12) RUE COPY OF THE MEMORANDUM OF PAYMENT OF
BILL OF RS 3,54,666/-
WP(C) NOS. 26389 & 25732 OF 2022
EXHIBIT R1(13) TRUE COPY OF THE LETTER NO. 23(2)
(3)/PMSSYPD/IISER/2022/188 DATED
07.07.2022
WP(C) NOS. 26389 & 25732 OF 2022
APPENDIX OF WP(C) 26389/2022
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF THE WORK ORDER DATED
10/08/2016
Exhibit P2 TRUE COPY OF THE OFFICE MEMORANDUM DATED
04/12/2017
Exhibit P3 TRUE COPY OF THE OFFICE MEMORANDUM DATED
06/02/2020
Exhibit P4 TRUE COPY OF THE OM DATED 29/09/2020
Exhibit P5 TRUE COPY OF THE MODEL CALCULATION
PINPOINTING THE ARITHMETICAL MISTAKE IN
THE EXHIBIT P4 OM CALCULATION SHEET
Exhibit P6 TRUE COPY OF THE JUDGMENT DATED
17/02/2022 IN W.P(C) NO. 5286/2022
Exhibit P7 TRUE COPY OF THE SPEAKING ORDER DATED
27/05/2022 ISSUED BY THE 2ND RESPONDENT
Exhibit P8 TRUE COPY OF THE OFFICE MEMORANDUM DATED
27/05/2022 ALONG WITH MODEL CALCULATION
Exhibit P9 TRUE COPY OF THE LIABILITY CERTIFICATE
(FORM IEE) ISSUED BY THE COMMERCIAL TAX
DEPARTMENT TO THE PETITIONER
Exhibit P10 TRUE COPY OF THE LETTER DATED 02/06/2022
SUBMITTED BY THE PETITIONER ALONG WITH A
COPY OF ONE SAMPLE BILL
Exhibit P11 TRUE COPY OF THE LETTER DATED 07/07/2022
Exhibit P12 TRUE COPY OF THE REPRESENTATION DATED
18/07/2022 ISSUED BY THE PETITIONER TO
THE 1ST RESPONDENT
Exhibit P13 TRUE COPY OF THE LETTER DATED 20/07/2022
ISSUED BY THE 2ND RESPONDENT TO THE
WP(C) NOS. 26389 & 25732 OF 2022
PETITIONER
RESPONDENT EXHIBITS
EXHIBIT R1(1) TRUE COPY OF THE RELEVENT PAGES OF THE
AGREEMENT DATED 20.08.2016
EXHIBIT R1(2) TRUE COPY OF THE SANCTION LETTER
NO.23(2)(10)IISERTVM PD-II/2019/214
DATED 30.11.2019
EXHIBIT R1(3) TRUE COPY OF THE FINAL BILL DATED
11.11.2021
EXHIBIT R1(4) TRUE COPY OF THE O.M. VIDE LETTER
NO.SE/RAS/GST/18 DATED 27.05.2022
EXHIBIT R1(5) TRUE COPY OF THE LETTER DATED 4.11.2022
ISSUED BY THE PETITIONER REQUESTING THE
RESPONDENTS TO APPOINT SOLE ARBITRATOR
EXHIBIT R1(6) TRUE COPY OF THE CORRESPONDENCE
ADDRESSED TO THE PETITIONER DATED
24.08.2021
