At, High Court of Judicature at Madras
By, THE HONOURABLE MR. JUSTICE C. SARAVANAN
For the Petitioners: Vinod Kumar, Advocate. For the Respondents: R1 & R5, A.P. Srinivas, Standing Counsel, R2 & R3, Joseph Prabakar, Advocate, R4, A.N.R. Jaya Prathap, Government Advocate, R6, No appearance.
(Prayer in W.P.No.10821 of 2015: Writ Petition is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the third respondent in provisional debit note No.GAIL/PDY/F&A/2014-15/VAT/148 dated 25.02.2015 and the consequential communication of the third respondent vide email dated 07.04.2015 quash the same and consequently forbear the Second to Fifth Respondents from levying and collecting service tax as well as VAT in respect of the transmission charges payable by the petitioner for the gas being supplied to the petitioner.
W.P.No.6135 of 2015: Writ Petition is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the third respondent in provisional debit note No.GAIL/PDY/F&A/2014-15/VAT/167 dated 25.02.2015 and quash the same.
W.P.No.6136 of 2015: Writ Petition is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the third respondent in provisional debit note No.GAIL/PDY/F&A/2014-15/VAT/175 dated 25.02.2015 and quash the same.
W.P.No.6236 of 2015: Writ Petition is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the third respondent in provisional debit note No.GAIL/PDY/F&A/2014-15/VAT/163 dated 25.02.2015 and quash the same.)
1. By this common order all the writ petitions are being disposed. The respective petitioners are aggrieved by the impugned provisional debit notes issued to them by the 2nd/3rd respondent and have prayed for quashing the same.
2. Respective petitioners have signed Gas Sales and Transmission Agreement (GSTA) with the 2nd respondent a supplier of natural gas for production of electricity. Under the agreement the 2nd/3rd respondent were charging transmission charges for delivery of the natural gas up to the point of delivery of the respective petitioners power plant.
3. On these charges, the 2nd respondent was also being service tax and passing on the incidence of such tax to the petitioners. This amount was being charged on a fixed on the basis. However, in 2014 the Petroleum and Natural Gas Regulatory Board passed an order which enjoined 2nd/3rd respondent to charge transmission charges on the proportionate value of the gas supply only.
4. In the light of the above development, the 2nd respondent represented by the 3rd respondent issued credit notes to the respective petitioners on the transmission charges and the proportionate service tax paid on collected. However, the 3rd respondent has proceeded to issue the provisional debit notes to the respective petitioners by including the same into the taxable turnover for the VAT paid under the provisions of the Tamil Nadu VAT Act, 2006 and the interest thereon retrospectively.
5. It is the contention of the petitioner that the 4th respondent being a “State” within the meaning of Article 12 of the Constitution of India cannot act unfairly by unilaterally debiting the respective petitioners so as to dilute the order of the Petroleum and Natural Gas Regulatory Board and debit their accounts. It is further submitted that after the writ petition was filed, the 3 rd respondent has also issued a letter dated 7.4.2015 to the respective petitioners wherein they have stated that they are discontinuing with the practice of collection service tax on transmission charges for the sale of gas with effect from 1.4.2015 and that such amounts would be charged subject to outcome of their service tax appeal that is pending before the Customs Excise Service Tax Appellate Tribunal, New Delhi.
6. In support of the present writ petitions, the learned counsel for the petitioners has relied on the following cases:-
I. Harbanslal Shahnia and Another Versus Indian Oil Corporation Ltd. (2003) 2 SCC 107;
II. Popcorn Entertainment Another versus City Industrial Development Corporation and Another (2007) 9 SCC 493.
7. The 2nd/3rd respondents have contested the maintainability of the present writ petitions and submit that these writ petitions are liable to be dismissed.
8. I have heard the learned counsel for the petitioners and the learned counsel for the 2nd and 3rd respondent who are contesting the present writ petitions. The GSTA agreement signed between the respective petitioner and the 2nd respondent contains an arbitration clause for resolution of dispute between them. The clause is reads as under:-
15. 1. GAIL (India) Limited has framed GAIL (India) Ltd Conciliation Rules 2010 in conformity with supplementary to Part-III of the Indian Arbitration and Conciliation Act 1996 for speedier, cost effective and amicable settlement of disputes through conciliation. A copy of the said rules is made available on GAIL's web site www.gailonline.com for reference. Unless specified otherwise in the Agreement all disputes shall be settled in accordance with the said GAIL (India) Ltd Conciliation Rules 2010.
9. Since the dispute between the respective petitioners and the the 2nd/3rd respondents are purely a commercial dispute which can be resolved in an arbitration proceeding in terms of the arbitration clause, I am of the view that these present writ petitions are liable to be dismissed as the petitioners have an alternate remedy which is more efficacious. The respective petitioners should therefore invoke the arbitration clause as per the respective agreement and proceed to resolve the dispute with the 2nd respondent.
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10. Therefore, these writ petitions are liable to be dismissed. Since the petitioners had obtained an interim relief which was in operation all along during the pendency of these writ petitions, same shall continue for a period of another 6 months from the date of receipt of copy of this order. 11. Petitioner may file appropriate application under Section 179 of the Arbitration and Conciliation Act, 1996 to continue the same under the provisions of the aforesaid Act if desired. These writ petitions thus stand dismissed with the above observations. Consequently, connected miscellaneous petitions are closed. No cost.