Hyundai Engineering India Pvt. Ltd. vs State of Maharashtra and Others

By this writ petition under article 226 of the Constitution of India, the petitioner challenges the order dated August 21, 2014 rejecting an application under the Maharashtra Value Added Tax Act, 2002 (for short, "the Act"). The petitioner is a company incorporated under the Companies Act, 1956 and claims to have been awarded a contract by the fourth respondent to this writ petition. The petitioner has sub-contracted the work under this contract in favour of the fifth respondent.

The petitioner challenges the vires of section 31 of the Maharashtra Value Added Tax Act, 2002. But we find that it is unnecessary to express any opinion on this issue and for the purposes of the present petition and the order that we intend to pass.

The petitioner has extensively referred to the terms and conditions of an agreement dated April 2, 2014, copy of which is at annexure A. The petitioner has also referred to a registration as non-resident dealer under the provisions of the Act and the Central Sales Tax Act, 1956. The petitioner has also referred to the terms of the sub-contract agreement dated June 30, 2014.

There are two sub-contractors and it is the case of the petitioner that the entire works contract agreement was back to back assigned to two subcontractors in entirety with due permission from the fourth respondent, leaving no work except supervising both sub-contractors in regard to the quality of the work executed by them. According to the petitioner, supervising does not involve any transfer of property in goods from the petitioner to fourth respondent during the execution of any works contract as contemplated under the scheme of the Act. Therefore the petitioner relied upon the provisions of section 31(1)(b)(ii) of the Maharashtra Value Added Tax Act, 2002 to make an application to the Commissioner. They applied for issuance of the certificate, which would certify that the contract under reference is not a works contract and therefore no deduction of taxes at source is called for from the payment the fourth respondent makes to the petitioner.

It is such an application, which has been rejected by the order of August 21, 2014. That is challenged in this writ petition together with vires of the section itself.

Mr. Joshi, learned counsel appearing on behalf of the petitioner raised various contentions and particularly with regard to validity and interpretation of the sub-section and clauses thereof. However, we clarify that it is not necessary to examine them nor the answer or reply thereto from the respondents. Keeping that issue alive and open for being raised at an appropriate stage and in appropriate proceedings, we proceed ahead.

Upon perusal of the application that the petitioner has made and copy of which has been annexed to the memo of this writ petition, at pages 104 and 105 of the paper book, we are of the opinion that the impugned order fails to make any reference to the transaction and the contract, the terms and conditions thereof and whether the petitioner could be said to be executing any works under the works contract agreement as claimed by it. The only reason which has been assigned in the conclusion is that the agreement dated April 2, 2004 is a works contract. In other words, it involves works contract. However, for the purposes of recording a conclusion of this nature, it was necessary and imperative for the Joint Commissioner of Sales Tax, to have referred to not only the agreement dated April 2, 2014, but other agreements under which the works have been sub-contracted. The petitioner''s stand that it has not been executing any works contract under the relevant provisions and within the definition of the said term under the Act requires a proper and complete examination and scrutiny. That has not been admittedly done in passing this one line order.

In such circumstances, we called upon Mr. Vagyani, learned Government Pleader, to take instructions as to whether the Commissioner/Joint Commissioner of Sales Tax, Maharashtra State, Mumbai, is ready and willing to examine the matter again and pass a fresh order in accordance with law without being influenced by any earlier conclusions.

Upon taking instructions, Mr. Vagyani informs the court that the Commissioner is ready and willing to examine this issue again. He is also ready and willing to offer an opportunity to the petitioner of being heard in person and after which he shall pass a fresh order uninfluenced by the earlier conclusions. He states that the same will be done within a period of four weeks from the date of receipt of copy of this order. We accept this statement made by Mr. Vagyani, on instructions, as undertaking given to this court. Based on the same, we quash and set aside the impugned order dated August 21, 2014 and remit the application made by the petitioner, copy of which at pages 104-105 of the paper book, for examination and scrutiny by the Commissioner again. The same shall be done accordingly and in terms of the undertaking recorded above. All contentions of both sides and in relation to validity of the section and contents of the application are kept open. Writ petition is disposed of accordingly. There will be no order as to costs.