Patna High Court
M/S Knorr- Bremse India Pvt. Ltd vs The Union Of India And Ors on 11 January, 2024
Bench: Chief Justice, Rajiv Roy
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.10998 of 2014
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M/s Knorr- Bremse India Private limited having registered office at 14/6,
Mathura Raod Faridabad, Haryana 121003 through its authorized signatory
Ajay Gupta.
... ... Petitioner/s
Versus
1. The Union of India through the General Manager Eastern railway Kolkata.
2. The Dy. Chief Mechanical Engineer (Wagon) , Eastern Railway, At and P.O.
Jamalpur, Distt. Munger.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mr. Nand Kishore Singh, Advocate
For the Railways : Mr. Anshuman Singh, CGC
For the State : Mr. Vikash Kumar, SC-11
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CORAM: HONOURABLE THE CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE RAJIV ROY
ORAL JUDGMENT
(Per: HONOURABLE THE CHIEF JUSTICE)
Date : 11-01-2024
The petitioner was awarded a work under
Annexure-2, which work commenced with an agreement on
28.05.2011
. The work awarded to the petitioner was retro
fitment of Bogie Mounted Brake System (BMBS) in 200
numbers of Air Break Wagons as per the work schedule. The
Railways while paying the invoices raised, deducted 4% tax and
paid it over to the Government as liability under the Bihar Value
Added Tax Act, 2005 (for brevity, the Act).
2. The petitioner, who was not a dealer
registered within the State of Bihar and who had its unit at
Patna High Court CWJC No.10998 of 2014 dt.11-01-2024
Faridabad in Haryana, claimed that the contract was for supply
of goods and there was no question of deduction as mandated
for a works contract. It was also contended that even if it is a
works contract, the goods having been supplied inter-state and
tax paid under the Central Sales Tax Act, there is no further
liability. It is argued that the inter-state supply of the goods of
the petitioner is exempted under Section 6 of the VAT Act.
3. The learned Government Advocate,
however, points out that Section 41 speaks of deduction to be
made from works contract and Clause (b) and (c) of Section 41
of the Act specifically speaks of the manner in which deductions
can be saved, insofar as works contracts executed within the
State. No such certificate has been obtained by the petitioner.
4. The learned Central Government Counsel
appearing for the Railways submits that the work commenced
and continued for two years between 26.11.2011 and
21.09.2012. When the deductions were made while clearing the
invoices submitted by the petitioner, the petitioner never raised
an objection with respect to the tax deduction. At this distance
of time there could be no claim raised for the tax deducted to be
refunded. In any event, the Railways have paid up the amounts
to the Government.
Patna High Court CWJC No.10998 of 2014 dt.11-01-2024
5. The learned counsel for the petitioner in
reply submits that Section 41 has no application since it is
subject to Section 6 and when there is no tax liability; being an
inter-state transaction, there is no need for obtaining a certificate
under the proviso to Section 41. The learned counsel would also
rely on a judgment of Division Bench of this Court in C.W.J.C.
No. 10444 of 2012 titled as PCM Cement Concrete Pvt. Ltd.
Vs. The UOI and Ors. dated 28.07.2023. The aforesaid
decision followed the decision of another Division Bench
exhibited as Annexure-6 in the writ petition; M/s Pandit
Electrical vs. The UOI; (2011) 2 PLJR 444.
6. Pandit Electrical and PCM Cement
Concrete Pvt. Ltd. (both supra) were in identical
circumstances. In the first of these cases, the petitioner's
company was supplying goods to the East Central Railways
after paying 4% CST and the challenge was against the
deduction of 4% tax of the contract amount under Section 41 of
the Act. The question was whether on inter-state supply of
goods, there would be a tax leviable under the State Act which
was answered in favour of the assessee and against the revenue
as is the established position.
7. In PCM Cement Concrete Pvt. Ltd.
Patna High Court CWJC No.10998 of 2014 dt.11-01-2024
(supra) also the contract was for manufacture and supply of
goods. The decisions of the Hon'ble Supreme Court in State of
A.P. v. National Thermal Power Corpn. Ltd.; (2002) 5 SCC
203 and Hyderabad Engg. Industries v. State of A.P.; (2011)
4 SCC 705 were noticed and relied on. In all the cited decisions
there was only supply of goods and in the later case, decided by
the Division Bench of this Court, pre-stressed concrete slabs and
RCC ballast retainers of precise and particular specification was
manufactured and supplied to the Railways. The contract itself
was for the supply inter-state; the obligation of the contractor
restricted to the manufacture and supply to the Railway
wagon/road vehicle at the nearest Railway station/siding etc;
with the contract including stacking and loading into such
Railway wagon/vehicle for transportation inter-state.
8. The facts in the present case are quite
distinct and different. As we notice from Annexure-1 produced
in the writ petition, the contract is a works contract. A brief
synopsis of the contract is produced as Annexure-A by the
Railways. The description of work is as follows:-
Supply, Dismantling,
Installation Testing & Commissioning of
Bogie Mounted Brake System as per
RDSO Spec.No.WD-23-BMBS-2008 or
latest 02-ABR-02 Rev. of latest 04-ABR-02
or latest, RDSO's Instruction Bulletin No.
Patna High Court CWJC No.10998 of 2014 dt.11-01-2024
RDSO/2011/WD/WMI-03 (As per list of
material Annexure-A)
9. The labour cost is also specified in the
contract, which makes it a works contract. The contract is not a
mere supply of goods as sought to be asserted by the petitioner.
10. In the circumstance of our finding that it is
a works contract, Section 41 squarely applies. The proviso to
Section 41 makes every person responsible for making any
payment in discharge of a liability in respect of transfer of
property of goods, whether in goods or in some other form in
the execution of a works contract to deduct an amount at the rate
specified by the State Government. This enables the deduction
by the awarder from the bills paid to the contractor. The 3 rd
proviso to Section 41 specifically requires a dealer to produce a
certificate issued by the Deputy Commissioner, Commercial
Taxes or the Assistant Commissioner, Commercial Taxes or the
Commercial Taxes Officer, In-charge of the concerned Circle;
where the dealer has no further liability to pay tax in terms of
the provisions of either Section 15 of the CST Act or Section 6
of the VAT Act. Definitely Section 41 insofar as the deduction is
concerned, is subject to Section 6; but, for absolving the
awarder from deducting tax, a certificate has to be produced as
has been provided under Clause (b) or Clause (c) of the 3rd
Patna High Court CWJC No.10998 of 2014 dt.11-01-2024
proviso of Section 41. There can be no escape from such
deduction, if a certificate is not produced and it is also pertinent
that the contractor, the petitioner herein never objected to the
deduction, when the same was made from the invoices raised on
the awarder.
11. The petitioner having not complied with
the provisions of the Act there is no question of a refund at this
point of time. We have already held that the decisions relied on,
of two Division Benches of this Court, are not applicable to the
facts of the case. We reject the writ petition leaving the parties
to suffer their respective costs.
12. The writ petition stands dismissed.
(K. Vinod Chandran, CJ)
( Rajiv Roy, J)
aditya/-
AFR/NAFR
CAV DATE
Uploading Date 19.01.2024.
Transmission Date
