Jindal Industries Ltd. vs State of H.P. and Others

Deepak Gupta, J.—By means of this petition, the petitioner prays that a writ of mandamus be issued directing the respondents to make payment of the Central sales tax as per law. According to the petitioner, the State Government has paid Central sales tax only at two per cent whereas it was liable to pay the same at four per cent and therefore should pay the balance sales tax at two per cent.

Briefly stated, the facts of the case are that the State invited tenders for supply of material including GI pipes. One of the terms and conditions was that the rate should be f.o.r. ex-work and freight up to nearest broad-gauge railheads, i.e., Kalka, Una, Kirtpur, Pathankot, etc. The rates were to be quoted exclusive of CST/GST which if applicable at the time of tendering were to be mentioned separately. Clause 16 of the agreement contained an arbitration clause. The petitioner-company submitted its quotation for GI pipes and one of the stipulation of the quotation reads as follows :

The rates are exclusive of CST which shall be charged extra at two per cent against form C/D.

Thereafter, negotiations were held and the petitioner revised its rates and supply order was placed upon the petitioner and condition No. 18.3 of the supply order reads as follows :

(iii) Central sales taxes as applicable will be paid extra and excise duty is nil for excise duty exempted pipes.

Condition No. 26 of the supply order reads as follows :

All other terms and conditions of the supply of G.I. Pipes will be the same as mentioned in the N.I.T.

The petitioner-company supplied the goods in the year 2006-2007 and thereafter it claimed that the rate of two per cent mentioned in the quotation was inadvertently and mistakenly mentioned and the same should have been four per cent. According to the petitioner this was a pure and simple technical error. The petitioner represented that it be paid the CST at four per cent as paid by it. This prayer was rejected on the ground that the financial bid was considered by the Tender Opening Committee by taking into consideration the CST at two per cent. Thereafter, the petitioner filed the present writ petition claiming the difference of two per cent.

The respondents have raised a preliminary objection that a writ petition is not maintainable and that this contractual obligation cannot be decided in a writ petition. It is also contended that in view of the fact that there was an arbitration agreement between the parties, the petitioner should be directed to avail of the remedy in such arbitration proceedings.

The undisputed facts as they emerge from the petition are that the rate of tax payable is four per cent. It is also not disputed that the petitioner-company paid tax at four per cent. It is also admitted case of the petitioner that in the quotation the rate of Central sales tax was mentioned as two per cent and not four per cent. The petitioner claims that this was done by mistake and since an overall reading of the contractual documents shows that the State was liable to pay sales tax "as applicable" therefore the State should pay the sales tax at four per cent.

As far as the preliminary objection of referring the matter to arbitration is concerned the same cannot be entertained at this stage especially in view of the fact that the respondents did not care to file any application u/s 8 of the Arbitration and Conciliation Act along with or before the filing of the reply to the writ petition.

As far as maintainability of the writ petition is concerned, normally, this court would not embark into an exercise where disputed questions of fact are involved and in contractual matters the court can interfere only when the facts are apparent from the record. I am in agreement with the petitioner that the jurisdiction of this court is not totally barred. However, there are well-settled principles with regard to exercise of jurisdiction in such matters. If disputed questions are involved then this court would not interfere in writ proceedings.

In the present case, the stand of the State is that the Tender Valuation Committee evaluated the total price by taking into consideration the rate of sales tax at two per cent as quoted by the petitioner.

I have perused the record and find that the comparative statement of costing including excise duty and sales tax of all the tenderers was considered by the committee. In the case of the petitioner, the Central sales tax, while considering the tender, was taken at two per cent. It is not only the petitioner who had quoted two per cent CST but I find that some other tenderers including M/s. Bhushan Ltd., had quoted Central sales tax at two per cent. The committee, therefore, evaluated the tenders on the basis of the quotation made by various tenderers including the petitioner. The petitioner having quoted two per cent as the sales tax cannot now resile and say that the statutory liability being four per cent the State should be held to pay this amount. There can be occasions where certain industries either on the ground of location or on the ground of being small-scale industries are totally exempt from payment of sales tax. Even in the comparative statement submitted, I find that at least one or two tenderers had mentioned that they were exempted from payment of sales tax. It was not for the tender valuation committee to ascertain whether the sales tax was zero per cent, two per cent or four per cent. It was to act on the basis of the quotation and since in the quotation the petitioner had quoted rate of two per cent it cannot turn around and say that this was done by mistake and that it is entitled to recover the entire sales tax of four per cent from the State. In view of the above discussion, I find no merit in the writ petition which is accordingly dismissed. No costs.