DINESH MAHESHWARI, J. -
(1.)Before entering into the subject matter, we may notice at the outset that this petition for special leave to appeal is barred by limitation by a period of 274 days. Though objections have been raised on behalf of the contesting respondent against the prayer for condonation of delay but, the record shows that notices on the application seeking condonation of delay as also on the petition for leave to appeal were issued way back on 18.11.2011 and for a long time, the matter remained pending while awaiting service on the respondents.
Ultimately, after completion of service, we had heard learned counsel for the contesting parties on merits. Having regard to the circumstances of the case and after having heard the contesting parties on merits, we find no reason to close the matter only on the ground of delay. Accordingly, delay in filing is condoned.
1.1. Leave granted.
(2.)This appeal by special leave is directed against the judgment and order dated 05.08.2008 as passed by the Orissa High Court at Cuttack in W.P. (C) No. 8857 of 2003, whereby the High Court accepted the claim of the respondent No. 1 of present appeal1, for reimbursement of the amount of sales tax levied in respect of the works contracts executed by it.
The High Court also directed the Opposite Parties to grant appropriate reimbursement as claimed by the writ petitioner in terms of Clause 45.2 of the General Conditions of Contract2 under the National Competitive Bidding Contract3 while quashing the clarification Circular dated 07.11.2001 issued by the Government of Orissa in its Department of Water Resources.
2.1. The appellant State of Orissa has challenged the order so passed by the High Court while essentially raising the questions concerning the nature and implication of the sales tax, levied in relation to the works contracts executed by the writ petitioner, under the Orissa Sales Tax Act, 1947 as amended in terms of the Constitution (Forty-sixth Amendment) Act, 1982; and concerning the operation and import of the relevant stipulations in the contracts in question.
(3.)The factual and background aspects of the matter, being not of much dispute and confined to a narrow compass, may be noticed, in brief, as follows:
3.1. The respondent No. 1 of this appeal, said to be a company of engineers and builders, who had been engaged in undertaking various works contracts, responded to the tenders floated by the respondent Nos. 6 to 18 (various offices of the Government of Orissa) and, on being determined as the lowest tenderer, was awarded the contracts from time to time.
3.2. It is not in dispute that the aforesaid contracts awarded to the respondent No. 1 carried the stipulations regarding taxes in Clause 45 of GCC. The claim of the respondent No. 1 for reimbursement of sales tax had been essentially based on Clause 45.2 of GCC, which carried the stipulation that any Central or State sales tax and other taxes on completed items of works (excluding penalty), as may be levied and paid by the contractor shall be reimbursed by the employer on proof of payment (and) on production of assessment certificate.
3.3. The sales tax regime in the State of Orissa is primarily governed by the Act of 1947. By way of the Orissa Sales Tax (Amendment) Act, 1984 and the Orissa Sales Tax (Amendment) Act, 1985, the amendments were brought about in the Act of 1947 with effect from 07.04.1984 whereby, inter alia, the definition of expression "Works contract" was inserted; the definition of the expression "Sale" was expanded so as to include therein the transfer of property in goods involved in the execution of a works contract; and specific meaning was also assigned to the expression "taxable turnover" in respect of a works contract for the purpose of the rate of tax payable by a dealer. The rate of tax payable by a dealer on the "taxable turnover" in respect of "works contract" was fixed at 4%.
3.4. On 04.11.1986, the Government of Orissa, in its Department of Irrigation and Power, issued a Circular to the effect that in case of works contract executed on or after 07.04.1984, containing the specific clause for reimbursement of sales tax, the Department of Irrigation and Power would be liable for reimbursement of the amount of sales tax actually paid by the concerned contractor on production of necessary documentary evidence. Pursuant to these observations and directions, reimbursement of the sales tax paid by the contractor company in respect of assessment years 1995-1996 to 1997-1998 was allowed.
3.5. Later on, the State Government issued a notification under Section 5 of the Act of 1947 whereby, the rate of tax payable by a dealer on the taxable turnover in respect of the works contract was increased to 8%. Thereafter, by way of the orders of assessment for the years 1998- 1999 to 2000-2001, the Assessing Authority levied sales tax @ 8% on the taxable turnover in respect of the works contracts executed by the contractor company. With reference to such assessments, the contractor company claimed reimbursement of the sales tax paid in respect of the works contracts executed by it.
3.6. However, in the meantime, the Government of Orissa, in its Department of Water Resources, issued another Circular dated 27.01.2000 to the Engineers-incharge of various offices and projects that the question as to whether sales tax deducted from the bills of the contractor and paid to the sales tax officer will be again reimbursed to the contractor whose quoted price was inclusive of all taxes as per Clause 13.3 of the Instructions to Bidders7, was under active consideration; and it was directed that no reimbursement of sales tax be made under Clause 45.2 of GCC until clarification was communicated in that regard.
3.7. Thereafter, on 07.11.2001, the State Government, in its Department of Water Resources, issued the impugned Circular, said to be a clarificatory one, stating that a completed item of works, for which the contractor had entered into an agreement with the department, was either an immovable property or a works contract and in either case, was not exigible to sales tax; and therefore, the question of payment of sales tax on such immovable property or works contract and consequential reimbursement by the department as per Clause 45.2 of the General Conditions of Contract, or similar provision in other contracts, did not arise.
Accordingly, the State Government instructed its Engineers- incharge not to reimburse the sales tax levied on cement, steel etc.; and also directed for recovery of the amount from the contractor wherever any such amount of sales tax had been reimbursed. These directions of the Government were followed up by another Circular dated 19.06.2002 to the same effect.
3.8. In view of the aforementioned Circulars dated 07.11.2001 and 19.06.2002, its claim, for reimbursement of the sales tax paid, being in jeopardy and rather, the proposition for recovery of the amount already reimbursed looming large, the contractor company preferred the writ petition leading to this appeal, while seeking the following reliefs: -
"(i) Issue a Rule Nisi Calling upon the Opposite Parties to show cause as to why the alleged clarification dated 07.11.2001 under Annexure-1, and the subsequent direction for recovery of the amount earlier reimbursed, vide letter dated 19.6.2002 under Annexure-3 ought not to be declared illegal, invalid and non-est in the eyes of law; And
(ii) issue a further Rule Nisi Calling upon the Opp. Parties to show cause as to why the reimbursement claims made by the petitioner under Annexure-5 series may not be granted with a period stipulated by this Hon'ble Court; And
(iii) in the event the Opp. Parties fail to show cause or show insufficient cause make the said Rule Nisi absolute and issue an appropriate writ of Mandamus or a writ of certiorari in line with the aforesaid Rule Nisi; And/or
(iv) further be pleased to direct either of the Opp. Parties i.e., the contracting parties (Opp. Parties 6-18) or the Sales-tax Authorities (Opp. Parties 3-5) to effect reimbursement or refund along with interest from the date of deposit of tax; And
(v) to pass any other writ/writs, order/orders as this Hon'ble Court may deem just and proper."