Research › Search › Judgment

Gauhati High Court · body

2019 DIGILAW 262 (GAU)

Pradip Kumar Ray v. Food Corporation of India

2019-02-26

KALYAN RAI SURANA

body2019
JUDGMENT : 1. Heard Dr. Ashok Saraf, learned senior counsel, assisted by Mr. P. Baruah, learned counsel for the petitioner. Also heard Mr. P.K. Roy, the learned standing counsel for the respondents, i.e., Food Corpn. of India. 2. Consequent to a tender process, the petitioner was awarded with the Contract for “Changing Old AC Sheet/CGI Sheet Roofing by Profile Sheet in Valley Guttered Godown Nos. A and B, 6 Nos. Mini Godown at FSD Cinnamara (Assam)” at the bid amount of Rs. 1,19,48,250, which was 11.01% below the estimated cost of Rs. 1,34,26,508. Accordingly, letter of acceptance dated 7.11.2014 was issued in favour of the petitioner. Upon performance of requisite formalities, the work order for the said contract was issued to the petitioner. Accordingly, the petitioner had completed the contract work. In course of the execution of the contract work, the petitioner had submitted four running amount bills for Rs. 20,33,996, Rs. 10,85,745, Rs. 20,98,573, and Rs. 24,79,837, respectively. In this petition, it is projected that as per law, 50% of service tax liability was to be borne by the petitioner, being the service provider and, as such, in the bills raised, the petitioners had deducted 50% of the service tax component from the said bills. Therefore, the respondents were liable to bear only 50% service tax liability. Yet, while releasing the payment against the said four running account bills, the respondents had shifted 100% liability of service tax upon the petitioner. This is one dispute between the parties. 3. It is projected that the contract works executed by the petitioner would amount to an original work of replacing the damaged AC/CGI sheets with new ones and, as such, it was contended that in terms of Notification No. 24/2012-ST dated 6.6.2012, service tax was determinable and payable only on the 40% of the gross bill component towards levy of service tax. This is the other dispute between the parties. 4. This is the other dispute between the parties. 4. It is stated that as the respondents had shifted 100% liability of service tax upon the petitioner, he had submitted a representation dated 16.11.2015, to the Assistant General Manager (CE), FCI, bringing to his notice that the 100% liability of service tax could not have been shifted to the petitioner, further claiming that service tax was not included in the DSR rates and further claiming that as his contract work was an original work of fitting new roofing material by replacing the old AC/CGI roof, therefore, as per Notification No. 24/2012-ST dated 6.6.2012, and Service Tax (Determination of Value) Rules, 2006, the petitioner was liable to pay Service Tax only on 40% of the gross bill amount charged in the running account bills for the works done towards the levy, demand and payment of service tax. In this regard, the petitioner had relied on the definition of “original work”, as explained in the said notification dated 6.6.2012. It was projected that service tax on the works allotted to the petitioner was incorrectly considered as the repairing works and, therefore, Service Tax was wrongly deducted from the running account bills at the rate of 70% of the gross value of such bills instead of computing service tax at the rate of 40% of the gross value of the bill towards service levy, demand and payment of service tax, as such, the petitioners had requested the respondents to reconsider the deduction of service tax for the work carried out by the petitioner and to refund the service tax which had already been deducted. It was further stated that despite another representation dated 7.3.2016, as the authorities did not consider the claim of the petitioner, the present writ petition has been filed, inter alia, praying for declaring the work in question was an original work and thereby service tax was payable only on 40% of the gross amount charged for work contract and for restraining the respondents from calculating service tax of 70% of the gross amount charged by the petitioner for the works contract. It was also prayed for a direction to the respondents to calculate service tax on the gross amount charged by the petitioner for the works contract and also for restraining the respondents from deducting service tax from the bills of the petitioner and for further directions to refund the amount of service tax already deducted from the running bills of the petitioner. 5. By filing their affidavit-in-opposition, while denying that any wrong was committed, the respondents had stated that the claim of the petitioner was not tenable. It was stated that by letter dated 4.3.2016, the respondents had informed the petitioner that his work was for modification of structures, which come under the capital cost and, therefore, the contract work awarded to the petitioner would come under “repair and maintenance” and, therefore, the respondents had justified the deduction of service tax on the ground that the expenditure of work was booked in ARMO fund. It was also stated that as the works was covered by contract between the parties, where all the works was inclusive of all taxes, therefore, the entire service tax liability was to be borne by the petitioner. Hence, by denying that the respondents had acted illegally, it was prayed that the present writ petition be dismissed. 6. The learned senior counsel for the petitioner has referred to the Conditions of Contract and it is submitted that under as per clause 36 thereof, it was provided that sales tax or any other tax on materials in respect of the said contract shall be payable by the contractor and in this context, it was urged that as “general words” followed a specific set or words, i.e., “sales-tax”, by applying the principles of ejusdem generis, the general words, i.e., “any other tax” must be understood to mean only sales tax and any other tax that may be equivalent to sales tax, and not beyond so as to even include service tax. It is submitted that as per clause 36A of the Conditions of Contract, it was agreed between the parties that the tendered rates shall be inclusive of all taxes and levies payable under the respective statutes and, as such, only such taxes which was “payable” by the petitioner could have been considered or treated to be the liability of the petitioner under the applicable statute. Hence, it is submitted that 50% of the total service tax payable for the tender work was the statutory liability of the respondents, as such, by virtue of the said clause 36A, the respondents could not have deducted such amount from the running account bills of the petitioner by expanding the meaning of the words “inclusive of all taxes” to mean and include the service tax liability, the onus of which was payable by the respondents. In this regard, by referring to the Notification No. 30/2012-Service Tax dated 20.6.2012, the learned senior counsel for the petitioner has referred to column 9 of the table contained therein, whereby in respect of services provided or agreed to be provided in service portion in execution of works contract 50% of the service tax was payable by the person providing the service and 50% of service tax was payable by the person receiving the service. In order to buttress, the said point, the learned senior counsel for the petitioner has relied on the case of Deputy Commissioner of Commercial Tax (Vigilance) v. Hindustan Lever Ltd., (2016) 13 SCC 28 (paras 5, 20, 21, 23, 25 and 26). It is submitted that the respondents could not have deducted the service tax liability required to be borne by the respondents and, as such, it is submitted that the deduction of service tax liability payable by the respondents from the bills payable to the petitioners was illegal and not sustainable. For the purpose of explaining the phrase or term ‘inclusive all taxes’, the case of Subhash Iron & Steel Rolling Industries v. State of Gujarat, (1982) 50 STC 305 (paras 11 and 12) has been relied upon. 7. It is also submitted that mere treatment of a particular work in the books of account of the respondents in a particular manner would not determine the service tax liability of the respondents under the scope of the contract work awarded to the petitioner. 7. It is also submitted that mere treatment of a particular work in the books of account of the respondents in a particular manner would not determine the service tax liability of the respondents under the scope of the contract work awarded to the petitioner. In this connection, by referring to the provisions of clause (A) and clause (B) of sub-rule (ii) of rule 2A of the Service Tax (Determination of Value) Rules, 2006 it is submitted that while service tax on original works was payable on 40% of the total amount charged for the works contract, for maintenance or repair or reconditioning or restoration or servicing of any goods service tax shall be payable on 70% of the total amount charged for the works contract. It is further submitted that under Explanation-1 appended to sub-rule (ii) of rule 2A of the said 2006 Rules, the words “original works” was defined to mean (i) all types of new constructions; (ii) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; and (iii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise. Hence, it is submitted that as the CIS Sheet/CGC Sheet which was sought to be changed or replaced would come within the meaning of additions and alterations to abandoned or damaged structures. It is submitted that if a particular work is defined under a particular section, rule or clause of a taxing statute, such entry is deemed to be excluded from all other general provisions of the said statute. Therefore, it is submitted that the respondents have incorrectly proposed to impose service tax on original works at the rate of 70% instead of 40% of the total amount charged for the works contract. 8. The learned senior counsel for the petitioner has also submitted that in Clause 36A of the Conditions of Contract it is provided that “All tendered rates shall be inclusive of all taxes and levies payable under the respective statutes”. 8. The learned senior counsel for the petitioner has also submitted that in Clause 36A of the Conditions of Contract it is provided that “All tendered rates shall be inclusive of all taxes and levies payable under the respective statutes”. In this connection it is submitted that for the purpose of the determination of such liability, three ingredients must be satisfied, firstly, there should be a valid levy under the taxing statute; secondly, there must be a determination with regard to the liability of the person upon whom tax is to be imposed; and thirdly, the liability of making payment of such tax would then accrue. Under such circumstance, it is submitted that the clause 36A providing for rates to be inclusive of tax and levies payable, it could only mean and include the money payable by the petitioner as service tax under the Service Tax Act and it would not deem to include even the service taxes liability, the onus of paying of which was statutorily liable to be borne by the respondents. 9. Per contra, the learned standing counsel for the respondents has submitted that as per the tender agreement as well as letter of acceptance dated 7.11.2014, the scope of work allotted to the petitioner was “changing of old AC and CGI sheet roofing by profile sheet in Valley Guttered Godown Nos. A and B, 6 Nos. Mini Godown at FSD Cinnamara (Assam) and, therefore, from the nomenclature itself, it was too farfetched for the petitioner to even imagine that the scope of the said work was within the campus of an “original work”.” By referring to the provisions of clauses (A) and (B) of sub-rule (ii) of rule 2A and sub-clause (ii) of clause (a) of Explanation 1 of the Service Tax (Determination of Value) Rules, 2006 it is submitted that the original works only meaning and included any additions and alterations to “abandoned” or “damaged” “structures on land that are required to make them workable and in this regard, it is submitted that the works-site were the petitioner had replaced old CI/CGC roof with Profile Sheet, was a running and working godown and it was not an abandoned site or a damage structure, as such, under the said 2006 Rules, the scope of such contract work would fall within the scope and ambit of an “original work”‘. Accordingly, it is submitted that the scope of work awarded to the petitioner was only a “repair work”, but not an “original work”. 10. By referring to clause 36A of the Conditions of Contract, it is submitted that as the tendered rates included all taxes, any taxing liability arising out of the contract would shift on the petitioner, who was contractually bound to pay such money. In this connection, it is submitted that notwithstanding the onus to pay tax, as provided by the Service Tax Act, under the contract agreement with the petitioner, all taxes and levies payable in connection with the entire contract work was to be borne by the petitioner. In order to elaborate on the said point, he has placed relied on the case of Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, (2012) 5 SCC 306 . Accordingly, it is submitted that the petitioner is not entitled to any relief as prayed for in this petition. 11. The learned senior counsel for the petitioner, in short reply has submitted that the decision rendered in the case of Rashtriya Ispat Nigam Ltd. (supra) was on the context of clause 9.3 of the Terms and Conditions of the Contract in question in the said case, wherein unlike the present case, it was provided that the contractor shall bear and pay all taxes, duties and other liabilities in connection with discharge of his obligation under the order. Accordingly, it is submitted that in the said case, as per the contract, the contractor had undertaken to bear and pay all taxes, but in contrast, in the present case in hand, the contract between the parties had bind the parties to be liable to bear their own liability in respect of taxes payable under the respective statutes, as such, it excluded the taxable liability payable and dischargeable by the respondents. 12. The points required to be determined in this petition, according to this court, are two: (a) Whether under the contract terms of the contract between the parties, the contract work in question was a “original works contract” or a “contract work for repair and maintenance” as provided under clauses (A) and (B) of sub-rule (ii) of rule 2A and sub-clause (ii) of clause (a) of Expianation-1 of the Service Tax (Determination of Value) Rules, 2006? (b) Whether as per the Contract Agreement between the parties, the share of service tax payable by the respondents could have been passed on to the petitioner, thereby giving right to the respondents to make the necessary deduction of service tax from the bills, including running account bills, payable to the petitioner? Point of determination No. (a) 13. Considered the materials available on record. It is seen that as per the Tender as well as from the Letter of Acceptance dated 7.11.2014, issued by the respondents, the nomenclature of the contract works allotted to the petitioner was “Changing of old AC and CGI sheet roofing by Profile Sheet in Valley Guttered Godown Nos. A and B, 6 Nos. Mini Godown at FSD Cinnamara (Assam). In this regard, the interpretation given by the learned senior counsel for the petitioner was that the roof formed a part of the structure standing on the land, as such, this was a case where old roofing material, being part of the structure was abandoned by the respondents, and, therefore, the installation and/or erection of a fresh roofing material constituted an “original work”. No doubt that at the outset this argument appears to be highly attractive, because in order to carry out the said work, the petitioner would have to purchase new roofing material, but then, even for the purpose of carrying out any conceivable contract work involving maintenance, repair or renewal, falling within the scope of Explanation (A) appended to rule 2A(ii) of the 2006 Rules, some material or the other has to be purchased and/or procured because the contract in question was not a contract which permitted re-using only the existing CI/CGI roofing materials after repairs. The present contract was not a contract that had been bifurcated in two parts, first part being an independent contract for removing existing roofing materials and the second part, being an independent contract for installing fresh roof. Therefore, as the work constituted a consolidated contract for replacing the existing CI/CGI sheet roof with Profile Sheet roof, in the considered opinion of this court, the present contract work awarded to the petitioner was rightly not treated by the respondents to be a contract for doing “original work”. Therefore, as the work constituted a consolidated contract for replacing the existing CI/CGI sheet roof with Profile Sheet roof, in the considered opinion of this court, the present contract work awarded to the petitioner was rightly not treated by the respondents to be a contract for doing “original work”. Hence, the point of determination No. (a) is answered by holding that the present contract in question was not an “original works contract” and, therefore, it could only have been treated as a contract work for maintenance, repairs, and renewal, entailing service tax on 70% of the component of the gross value of the contract. It is clarified herein that this finding is limited to the interpretation of contract between the parties herein, and this finding is not intended to be a conclusive determination for interpretation of taxable entry under Service Tax as the Revenue has not been heard on the point. Point of determination No. (b) 14. In order to appreciate the point, the relevant clauses 36 and 36A of the Conditions of Contract is quoted below: “Clause 36: (i) Sales-tax or any other tax on materials in respect of this contract shall be payable by the contractor and Food Corporation of India shall not entertain any claim whatsoever in this respect. (ii) The contractor shall deposit royalty and obtain necessary permit for supply of the red bajri, stone, kankar, etc., from local authorities. (iii) If pursuant to or under any law, notification or order any royalty, cess or the like becomes payable by the FCI and does not any time become payable by the Contractor to the State Government. Local authorities in respect of any material used by the contractor in the works then in such a case, it shall be lawful to the Corporation and it will have the right and be entitled to recover the amount paid in the circumstances as aforesaid from dues of the contractor. Clause 36A: (i) All tendered rates shall be inclusive of all taxes and levies payable under respective statutes. However, pursuant to the Constitution (46th Amendment) Act, 1982, if any further tax or levy is imposed by statute, after the last stipulated date for the receipt of Tender including extensions if any and the contractor shall be reimbursed the amount so paid, provided such payments. However, pursuant to the Constitution (46th Amendment) Act, 1982, if any further tax or levy is imposed by statute, after the last stipulated date for the receipt of Tender including extensions if any and the contractor shall be reimbursed the amount so paid, provided such payments. If any, is not, in the opinion of the DGM (Engg.) (whose decision shall be final and binding on the contractor) attributable to delay in execution of work within the control of the contractor. Service Tax will be Governed as per Circular No. 09/2012 of FCI TAXATION CELL. (ii) The contractor shall keep necessary books of account and other documents for the purpose of this condition as may be necessary and shall allow inspection of the same by a duly authorized Representative of the FCI and/or the Engineer-in-charge and further shall furnish such other information/documents as the Engineer-in-charge may require from time-to-time. (iii) The contractor shall, within a period of 30 days of the imposition of any such further tax or levy, pursuant to the Constitution (Forty-sixth Amendment) Act, 1982, give a written Notice thereof to the Engineer-in-charge that the same is given pursuant to this condition, together with all necessary information relating thereto.” 15. Thus, it is seen that the aforesaid clause 36A is comprised of the following words — “All tendered rates shall be inclusive of all taxes and levies payable under respective statutes”. Now, there is no dispute that in all cases, all or any taxes and levies would be payable under one statute or the other. But in this case, the vital question that would govern a contracting parties is whether as per the particular notifications on Service Tax, the incidence of a part of service taxes would be borne by the respondents or not, or whether there is anything in the contract, by virtue of which the petitioner had undertaken to bear the burden of such tax, which was otherwise required to be borne exclusively by the respondent. In this regard, it is seen that under Column-9 of the “Table” appended to the taxing Notification No. 30/2012-Service Tax dated 20th June, 2012, the onus of paying service tax is required to be shared at the ratio of 50:50 between the respondents and the petitioner, being the person receiving service and the person providing the service. In this regard, it is seen that under Column-9 of the “Table” appended to the taxing Notification No. 30/2012-Service Tax dated 20th June, 2012, the onus of paying service tax is required to be shared at the ratio of 50:50 between the respondents and the petitioner, being the person receiving service and the person providing the service. Therefore, viewed from the said angle, the notification envisages that the petitioner would be required to bear only his 50% share of service tax and the remaining 50% share of service tax would be borne by the respondents. However, on a comparative reading of clause 36 of the Conditions of Contract, it is seen that it clearly contains that sales tax or any other tax on materials in respect of the said contract shall be payable by the contractor. Therefore, under clause 36A of the Conditions of Contract, there appears to be a departure from the language used in clause 36(i)(a) of the said Conditions of Contract on the ground that it envisages that the entire sales tax or any other tax levied on materials was to be borne by the petitioner, which is conspicuously absent in clause 36A, inter alia, providing that the tendered rates would be inclusive of all taxes payable under respective statutes. Thus, tax as envisaged under clause 36A excludes those taxes, levies, etc., which are described in Clause 36 of the Conditions of Contract. 16. The learned senior counsel for the petitioner had relied on the case of Hindustan Lever Ltd. (supra). The question involved therein, inter alia, was whether the legend inclusive of taxes found on the packets of Dharwad and non-Dharwad Tea, the distinction as such been lost on the consumer, whether it cannot be said that taxes are inclined and collected on the tax exempted tea. Paragraphs 25 and 26 thereof is quoted below: “25. In this context, it would be relevant to refer to the decision of the court in Delhi Cloth and General Mills Co. Ltd. v. C.S.T., (1971) 2 SCC 559 . This case relates to Madhya Pradesh General Sales Tax Act, 1958. While interpreting the words “turnover” and “sale price” in the context of the charging section it was observed that the liability to pay tax was on the dealer and the purchaser had no liability to pay tax. Ltd. v. C.S.T., (1971) 2 SCC 559 . This case relates to Madhya Pradesh General Sales Tax Act, 1958. While interpreting the words “turnover” and “sale price” in the context of the charging section it was observed that the liability to pay tax was on the dealer and the purchaser had no liability to pay tax. If a dealer had to pass the tax burden on to the purchaser, he could only do by adding the tax in question to the price of the goods sold. If that be so, the taxes collected by the dealer from the purchaser became a part of the sale price as fixed. Thus, the amount recovered by the dealer was in reality a part of the entire sale consideration. To appreciate the principle we may usefully reproduce certain passages from the said authority: ‘6. Under section 4 the liability to pay tax is that of the dealer. The purchaser has no liability to pay tax. There is no provision in the Act from which it can be gathered that the Act imposes any liability on the purchaser to pay the tax imposed on the dealer. If the dealer passes on his tax burden to his purchasers he can only do it by adding the tax in question to the price of the goods sold. In that event the price fixed for the goods including the tax payable becomes the valuable consideration given by the purchasers for the goods purchased by him. It that be so, the tax collected by the dealer from his purchasers becomes a part of the sale price fixed, as defined in section 2(o). In some of the Sales Tax Acts power has been conferred on the dealers to pass on the incidence of tax to the purchasers subject to certain conditions. Those provisions may call for different consideration. In the Act there is no such provision except section 7A which was introduced into the Act by Madhya Pradesh Act 23 of 1963. In some of the Sales Tax Acts power has been conferred on the dealers to pass on the incidence of tax to the purchasers subject to certain conditions. Those provisions may call for different consideration. In the Act there is no such provision except section 7A which was introduced into the Act by Madhya Pradesh Act 23 of 1963. That provision would have relevance only in respect of the assessment for the year 1963-1964/ Section 7A says: ‘No dealer shall collect any amount, by way of sales tax or purchase tax, from a person who sells agricultural or horticultural produce grown by himself or grown on any land in which he has an interest, whether as owner, usufructuary mortgagee, tenant or otherwise, when such produce is sold in the form in which it was produced, without being subjected to any physical, chemical or other process for being made fit for consumption save mere dehusking, cleaning, grading or sorting.’ 7. In these appeals, it is not necessary to examine the relevance of that provision. But that provision does any give only statutory power to collect sales tax as such from any class of buyers. There is no other provision in the Act which confers such a power on the dealers. Unless the price of an article is controlled, it is always open to the buyer and the seller to agree upon the price to be payable. While doing so it is open to the dealer to include in the price the tax payable by him to the Government. If he does so, he cannot be said to be collecting the tax payable by him from his buyers. The levy and collection of tax is regulated by law and not by contract. So long as there is no law empowering the dealer to collect tax from his buyer or seller, there is no legal basis for saying that the dealer is entitled to collect the tax payable by him from his buyer or seller. Whatever collection that may be made by the dealer from his customers the same can only be considered as valuable consideration for the goods sold. ********* 10. Whatever collection that may be made by the dealer from his customers the same can only be considered as valuable consideration for the goods sold. ********* 10. From all these observations, it is clear that when the seller passes on his tax liability to the buyer, the amount recovered by the dealer is really part of the entire consideration paid by the buyer and the distinction between the two amounts, — tax and price — losses all significance.’ The relevance of this decision is that it holds that in a given case the tax component may form a part of the sale price and cannot be treated as a separate component. 26. In the case at hand, when the respondent was not liable to pay tax and had not passed on the tax liability, we do not think, sale consideration received should be bifurcated and divided on the basis of any assumption that the sale price received must have included the tax. This fiction has no application in the present case. There is neither such principle nor any precept in law. In any case the finding of fact is to the contrary.” 17. The learned counsel for the respondents, on the other hand, has placed reliance on the case of Rashtriya Ispat Nigam Ltd. (supra). Paragraphs 3, 4, 34 to 42 are quoted below: 3. The appellant, a Government of India undertaking is engaged in the manufacture of steel products and pig-iron for sale in the domestic and export markets. The respondent is a partnership firm carrying on the business of transportation of goods. In the year 1997, the appellant appointed the respondent as the handling contractor in respect of appellant's iron and steel materials from their stockyard at Kalamboli, Navi Mumbai. A formal contract was entered into between the two of them on 17.6.1998. ‘Terms and conditions for handling of iron and steel materials’ though recorded in a separate document, formed a part of this contract. Clause 9.0 of these terms and conditions was concerning the payment of bills. 4. Clause 9.3 thereof read as follows: ‘9:3. The Contractor shall bear and pay all taxes, duties and other liabilities in connection with discharge of his obligations under this order. Clause 9.0 of these terms and conditions was concerning the payment of bills. 4. Clause 9.3 thereof read as follows: ‘9:3. The Contractor shall bear and pay all taxes, duties and other liabilities in connection with discharge of his obligations under this order. Any income-tax or any other taxes or duties which the company may be required by law to deduct shall be deducted at source and the same shall be paid to the Tax Authorities for the account of the Contractor and the Company shall provide the Contractor with required Tax Deduction Certificate’. 34. If we look into this clause 6.0, we find that the obligations of the contractor are defined and spelt out in minute details. Clause 6.0 is split into 33 sub-clauses, and it provides for obligations of the contractor in various situations concerning the clearance of consignments, and the services to be provided by the respondent as the handling contractor wherefrom the tax liability arises. The contractor is made responsible for pilferage, any loss or misplacement of the consignments also. Clause 9.0 which deals with payment of bills, provides in clauses 9.1 and 9.2 that the bills will be prepared on the basis of the actual operations performed and the materials accounted on the basis of weight carried and received. 35. Clause 9.3 has to be seen on this background. The tax liability will depend upon the value of the taxable service provided, which will vary depending upon the volume of the goods handled. 36. It was submitted on behalf of the respondent that clause 9.3 and the contract must be read as a whole and one must harmonise various provisions thereof. However, in fact when that is done as above, clause 9.3 will have to be held as containing the stipulation of the contractor accepting the liability to pay the service tax, since the liability did arise out of the discharge of his obligations under the contract. It appears that the rationale behind clause 9.3 was that the petitioner as a Public Sector Undertaking should be thereby exposed only to a known and determined liability under the contract, and all other risks regarding taxes arising out of the obligations of the contractor are assumed by the contractor. 37. It appears that the rationale behind clause 9.3 was that the petitioner as a Public Sector Undertaking should be thereby exposed only to a known and determined liability under the contract, and all other risks regarding taxes arising out of the obligations of the contractor are assumed by the contractor. 37. As far as the submission of shifting of tax liability is concerned, as observed in paragraph 9 of Laghu Udyog Bharati (supra), service tax is an indirect tax, and it is possible that it may be passed on. Therefore, an assessee can certainty enter into a contract to shift its liability of service tax. 38. Though the appellant became the assessee due to amendment of 2000, his position is exactly the same as in respect of Sales Tax, where the seller is the assessee, and is liable to pay Sales Tax to the tax authorities, but it is open to the seller, under his contract with the buyer, to recover the Sales Tax from the buyer, and to pass on the tax burden to him. Therefore, though there is no difficulty in accepting that after the amendment of 2000 the liability to pay the service tax is on the appellant as the assessee, the liability arose out of the services rendered by the respondent to the appellant, and that too prior to this amendment when the liability was on the service provider. 39. The provisions concerning service tax are relevant only as between the appellant as an assessee under the statute and the tax authorities. This statutory provision can be of no relevance to determine the rights and liabilities between the appellant and the respondent as agreed in the contract between two of them. There was nothing in law to prevent the appellant from entering into an agreement with the respondent handling contractor that the burden of any tax arising out of obligations of the respondent under the contract would be borne by the respondent. 40. If this clause was to be read as meaning that the respondent would be liable only to honour his own tax liabilities, and not the liabilities arising out of the obligations under the contract, there was no need to make such a provision in a bilateral commercial document executed by the parties, since the respondent would be otherwise also liable for the same. 41. 41. In Bank of India (supra) one party, viz., the bank was responsible for the formulation of the Voluntary Retirement Scheme, and the employees had only to decide whether to opt for it or not, and the principle of contra proferentem was applied. Unlike the VRS scheme, in the present case we are concerned with a clause in a commercial contract which is a bilateral document mutually agreed upon, and, hence, this principle can have no application. Therefore, clause 9.3 will have to be read as incorporated only with a view to provide for contractor's acceptance of the tax liability arising out of his obligations under the contract. 42. It was pointed out on behalf of the appellant that it is conventional and accepted commercial practice to shift such liability to the contractor. A similar clause was considered by this court in the case of Numaligarh Refinery Ltd. v. Daelim Industrial Company Ltd., (2007) 8 SCC 466 . In that matter, the question was as to whether the contractor was liable to pay and bear the countervailing duty on the imports though this duty came into force subsequent to the relevant contract. The relevant clause 2(b) read as follows: “16…. ‘2. (b) All taxes and duties in respect of job mentioned in the aforesaid contracts shall be the entire responsibility of the contractor…”‘ Reading this clause and the connected documents, this court held that they leave no manner of doubt that all the taxes and levies shall be borne by the contractor including this countervailing duty.” 18. Therefore, on a competitive reading of the ratio laid down by the hon'ble Apex Court in the case of Hindustan Lever Ltd. (supra) and Dewan Chand Ram Saran (supra), it is seen that in the later case, the issue related to shifting of the burden service tax liability from statutory assessee to the service recipients and in that context, while interpreting the contract agreement between the parties, clause 9.3 of the terms and conditions of the said contract was referred to and it was held that the said clause 9.3 was the contractor's acceptance of the tax liability arising out of his obligations under the contract. As the tax liabilities in respect of the job mentioned in the contract was the entire responsibility of the contractor, it was held in the said case that all taxes and levies was to be borne by the contractor. The hon'ble Apex Court further held that there was nothing in law to prevent the appellant therein from entering into an agreement with the respondent therein, being the handing contractor, that the burden of tax arising out of obligations of the respondent under the contract would be borne by the respondent therein. However, in the present case in hand, on reading clause 36A leaves no room for doubt that the parties had contracted that ‘all tendered rates shall be inclusive of all taxes and levies payable under the respective statutes’. Therefore, when as per statute, i.e., Notification dated 20.6.2012, the liability of the respondent, as prescribed as 50% in respect of services provided or agreed to be provided in service portion in execution of works contract, being the liability the person receiving the service, there was no clause in the contract agreement by a virtue of which it can be said that there was a binding contract between the parties by virtue of which the burden of the tax liability falling upon the respondents would be borne by the petitioner, this court is of the considered opinion that there was no contractual agreement between the parties so as to saddle the petitioner with the service tax liability which was statutory levied on the respondent. 19. Hence, the point of determination number (b) is answered by holding that as per the contract agreement between the parties, the share of service tax payable by the respondents could not have been passed on to the petitioner and, therefore, the respondents did not get any right to make deduction of service tax (liability of the respondents 50% share of service tax) from the bills payable to the petitioner. 20. 20. In view of the discussions above, this writ petition stands partly allowed by (i) restraining the respondents from deducting service tax (liability of the respondents 50% share of service tax) from the bills of the petitioner, and (ii) directing the respondents to refund the amount of service tax (liability of the respondents 50% share of service tax) already deducted from the running account bills of the petitioner within a period of 3 months from the date of receipt of certified copy of this order. In so far as, the remaining prayers in the writ petition are concerned, in view of the discussions above, the relief claimed under the remaining prayers are declined. 21. No costs.