Page 77 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] METRRO WASTE HANDLING PVT. LTD. v. SOUTH DELHI MUNICIPAL CORPN. 443
tax is not shown separately in the bills as having paid. It further notes that as per
notification dated 20-6-2012, service tax is not payable whereas it is an included
element in the rate. Hence, the report concludes that this amount has been
wrongly released.
17. In my opinion the said conclusion of the Audit team is wrong and
arrived at de hors the terms of the agreement dated 27-8-2012 between the parties.
The agreed rate as per the agreement is fixed at Rs. 1934/- per day all inclusive.
The rate doe not vary based on increase or decrease of various stipulated com-
ponents including service tax. The clear terms of the agreement do not warrant
deduction of rates other than on account of full or minimum wages. Hence, there
was no justification for the respondent to deduct the payments of the petitioner
on account of exemption of service tax.
18. My above conclusion is fortified by another important fact. The pe-
titioner has taken a stand that the service tax was exempt on the said service even
prior to 20-6-2012. It pleaded that on 1-6-2017 Section 66 of Finance Act came into
effect. It provided that service shall be levied at the rate of 12% of the value of the
taxable service which are listed in clause (105) of Section 65 of the said Act. It is
stated that Section 65, clause (105) does not anywhere specify that Service of Col-
lection of Municipal Solid Waste as a taxable service. Hence, it is pleaded that no
service tax was payable on the service being provided by the petitioner at any
stage. It may be noted that this plea is clearly raised by the petitioner in the writ
petition. Respondent have not denied this in the counter-affidavit or in the
course of arguments made in court. It is manifest that service tax was not payable
throughout i.e. when the tender was flouted, when the rates were negotiated
with the petitioner, who was the lower bidder, when the work order was issued
on 2-6-2012 or when the agreement was executed on 27-8-2012. Hence, mere be-
cause in some internal working sheets/calculations, the respondent took into
account some rate of service tax which did not exist, the same cannot be ground
for the petitioner to unilaterally change the terms of the contract and reduce the
negotiated rate payable to the petitioner.
19. It is also clear that the parties understood that the agreed rate paya-
ble to the petitioner does not include any component of service tax. This is mani-
fest from the fact that subsequent to the work order dated 2-6-2012, the petitioner
started raising invoices. None of the invoices stipulated a separate mention of
service tax in the bills. The respondent continued to pay these bills. Payments
have been made of the bills without any deductions of alleged service tax from
June, 2012 to April, 2015. Suddenly thereafter solely on Audit Objections, the re-
spondent decided to deduct amounts of alleged service tax component from the
paid/future bills of the petitioner.
20. By the conduct of the parties, it is manifest that the parties under-
stood that the service tax was not a component of the agreed rate.
21. In this context, reference may be had to the judgment of the Su-
preme Court in the case of Godhra Electricity Co. Ltd. v. State of Gujarat & Anr.,
(1975) 1 SCC 199 where it was held as follows :
11. “In the process of interpretation of the terms of a contract, the court
can frequently get great assistance from the interpreting statements made
by the parties themselves or from their conduct in rendering or in receiving
performances under it. Parties can, by mutual agreement, make their own
contracts; they can also by mutual agreement remake them. The process of
practical interpretation and application, however, is not regarded by the
GST LAW TIMES  23rd July 2020  77