HON'BLE SRI JUSTICE C.V. NAGARJUNA REDDY W.P.No.31860 of 2014 Date : 17-12-2014 Between:
M/s. Ghousia Voluntary Society, Represented by its President S. Dasthagiri, Chittoor District .. Petitioner And Dravidian University, Represented by its Registrar, Kuppam, Chittoor District .. Respondent Counsel for petitioner : Mr. I. Koti Reddy Counsel for respondent : Mr. B. Parameswara Rao, Standing Counsel The Court made the following :
ORDER:
This Writ Petition is filed for a mandamus to declare the action of the respondent-University in not taking appropriate action on the petitioner’s representation dated 1- 10-2014 for payment of Rs.31,71,695/- towards interest payable to the Central Excise, Customs and Service Tax Department, Tirupathi (for short “the Central Excise Department”) on the delayed payment of Service Tax to avoid penalties as illegal and arbitrary.
The petitioner-society was entrusted with the work of supply of non-teaching personnel in various Departments/Sections through different sources in pursuance of resolution dated 6-12-2008 of the Executive Committee of the respondent under proceedings dated 1-5-2009 issued to this effect. It is the pleaded case of the petitioner that as per the agreed terms, the respondent-University has to bear the liability of service tax @ 12.36% on the remuneration and Agency’s commission. As the respondent failed to pay the monthly service tax, the Commissioner of Central Excise Department issued show cause notice dated 28-3-2012 to the petitioner for payment of Rs.59,59,700/-. That though the petitioner has submitted its representations for payment of Service Tax, the respondent failed to pay the same, which has led to the Commissioner of Central Excise Department passing a final order on 24-7-2012, as per which a sum of Rs.59,59,700/- was determined as service tax besides levy of interest on delayed payment as per the provisions of Section 75 of the Finance Act, 1994 (for short “the Act”). On the representations made by the petitioner, the respondent has paid the Service Tax of Rs.59,59,700/- on 11-11-2013, but has not paid the interest. The petitioner has made a representation on 1-10-2014 requesting the respondent to pay the interest as the Central Excise Department is insisting on the petitioner to make the payment. As the petitioner’s request was not accepted, it has filed this Writ Petition.
In the counter affidavit filed by the Registrar of the respondent-University, while admitting that the University has paid Rs.59,59,700/- towards Service Tax for the years 2006-07 to 2011-12, he has however, denied the liability to pay interest as there is no understanding between the respondent-University and the petitioner with regard to payment of interest for delayed payment of service tax. The Registrar has asserted that it is the duty of the petitioner to pay interest to the Central Excise Department as the burden lies on him.
Along with the Writ Petition, the petitioner filed a copy of work order dated 1-5-2009, wherein it is inter alia mentioned as under :
“M/s. Ghousia Voluntary Society, Chittoor have requested to issue work order and to provide the following amounts for implementing the scheme vide their letter read 4 above.
1) Institutions/Agency’s EPF contribution @ 13.61%
2) Service Tax @ 12.36%on the total remuneration & Agency’s commission.
After careful consideration of the proposal, sanction is hereby accorded to utilise the services of Non- teaching personnel through M/s. Ghousia Voluntary Society, Chittoor for a period of one year w.e.f. 01-04- 209 by paying the commission @ Rs.100/- per head per month, as per the requirement of staff in various Departments/Sections of the University. The Agency has to enter an agreement with the University and submit a Non-Judicial Stamp paper worth Rs.100/-. And follow the guidelines of the government and instructions of the University issued from time to time. The Agency is responsible for payment of remuneration to each individual within the stipulated time. The University reserves the right to terminate the Agreement/Services without assigning any reason. The Agency should pay the remuneration as ordered by the University from time to time to the categories of the posts indicated therein.
Therefore sanction is hereby accorded to implement the scheme w.e.f. 01-04-2009 and make the following payment every month.
1) Outsourcing Agency’s commission : Rs.100/- per head per month payable to M/s. Ghousia Voluntary Society.
2) Employees EPF Contribution (to be deducted from Employees remuneration) : 12%
3) Employers/Agency’s EPF contribution : 13.61%
4) Service Tax @ 12.36% on the remune- ration and Agency’s commission.
5) Income Tax as applicable
6) On behalf of the Agency, the University will pay the amounts deducted directly to the concerned Departments, except the commission of Outsourcing Agency.
7) The Agency has to submit the acquaintances along with the subsequent month’s salary bill.”
From the work order, it is clearly evident that on the request of the petitioner, the respondent has greed to pay the EPF contribution @ 13.61% as well as Service Tax @ 12.36% on the total remuneration and the Agency’s commission, respectively, on monthly basis. Admittedly, the respondent has failed to make such payment, as a result of which the entire liability has got accumulated to a sum of Rs.59,59,700/- with interest levied thereon under Section 75 of the Act. Therefore, the plea of the respondent that the liability to pay interest is on the petitioner is not only unreasonable but also unwholesome. It is not the pleaded case of the respondent that it has paid the Service Tax on a month to month basis to the petitioner and the latter has failed to pay the same to the Central Excise Department. Having acknowledged the liability of payment of Service Tax and paid the same after final determination of liability was made by the Commissioner of Central Excise, it lies ill in the mouth of the respondent to deny its liability to pay interest.
From the proceedings dated 1-5-2009, it is evident that the respondent-University has to pay the Service Tax on monthly basis. Consequently, if the payment is delayed attracting statutory interest, the respondent cannot deny its liability to pay the same.
For the above mentioned reasons, it is declared that the petitioner is not liable to pay interest on Service Tax and that it is the responsibility of the respondent-University to make such payment to the Central Excise Department.
The Writ Petition is accordingly disposed of.
As a sequel to the disposal of the Writ Petition, WPMP No.39825 of 2014 is disposed of as infructuous.
Justice C.V. Nagarjuna Reddy