HINDUSTAN CONSTRUCTION CO LIMITED Vs. STATE OF HARYANA

JUDGEMENT

(1.) PETITIONER is seeking the quashing of a letter Annexure P-6 which the Assistant Excise and Taxation Officer, Assessing Authority, Jagadhri, has directed to intimate the amount of payment received by the petitioner against the execution of the contract undertaken by the petitioner, so that the amount of sales-tax due can be assessed. Further, the petitioner seeks a direction of a writ of mandamus for the refund of Rs. 16,75,000.00 with interest at the rate of 24% from the respondents on the ground that said amount was not liable to deducted at the time of making advance towards the mobilisation advance.

(2.) THE petitioner is an Engineering and Construction concern. By an agreement dated 19. 9. 96 with the Governor of Haryana acting through Chief Engineer, Construction Unit (1), Haryana, the petitioner undertook, the construction of Hathni Kund Barrage, and its appurtenant works. One of the terms of the agreement was Sub-clause 60. 7 at Annexure P-3 its caption is "advance payment". Thus clause is divided into Clauses (a), (b) and (c ). Clause (a) stated that the employer (respondent No. 3) will make an advance at the rate of 12% interest to the contractor (petitioner), exclusively for the costs of mobilisation in respect of the works in an amount equivalent to 5% of the contract price named in the Letter of Acceptance. The subsequent portion of that clause further give the details as to the manner in which such an advance shall be paid against the bank guarantee. Sub-clause (b) of that clause provides regarding another type of advance on the same terms, and conditions as above, for meeting the price of plant, and equipments by the contractor. Sub-clause (c) of the clause makes a provision regarding the repayment of such advance payment, which is to be made by way of deduction from the interim payments certified by the Engineer. The concluding portion of Clause (c) deserves attention. Therefore, its reproduces below : "the deductions so affected in pursuant to this Clause will be first adjusted towards capital. The interest so occurred will be recovered at the rate to be fixed by the Engineer with the approval of the Employer so that there will be no outstanding dues by the time 90% of the work is completed. "

(3.) ASSISTANT Advocate General, Haryana, for the respondent has contended that the advance thus given to the petitioner is an advance payment towards the intended performance of the contract, and the amount was meant to make provision as a mobile resources for the execution of work by the contractor. He has, further, submits that as the petitioner has received a valuable consideration for the execution of the work, he is liable to pay the sales tax.