STATE OF U.P. AND ORS. versus BRIDGE AND ROOF CO. (INDIA) LTD.

Citation: [1996] SUPP. 4 S.C.R. 762 · Decided: 20-08-1996 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Dismissed

Judgment (excerpt)

A 
STATE OF U.P. AND ORS. 
v. 
BRIDGE AND ROOF CO. (INDIA) LTD. 
AUGUST 20, 1996 
B 
(B.P. JEEVAN REDDY AND K.S. PARIPOORNAN, JJ.] 
Co11stitutio11 of India, 1950 ·Article 226. 
Writ petition-Maintainability of-Contract betwee11 State Government 
C and Contract01~Tenns of-Provided 4% deduction of tax at source under S. 
8-D(l) of U.P. Trade Tax Act, 194~However, Commissioner of Sales Tax 
directed deduction of 1% tax under proviso to S. 8-D(l)--High Cowt instead 
of going into dispute merely directed deduct of 1% tQX:-ffeld : High Court 
justified in not going into dispute as it involved interpretation of tenns of 
contract-Mere fact it also involved interpretation of orders u11der S. 7- D or 
D S.8(1) did not convert tile controversy into a public law issue-Proper course 
was reference to arbitration or institution of suit and not writ petition-U.P. 
Trade Tax Act, 1948, Ss. 3-F, 7-D and 8-D. 
The respondent was a Public Sector Corporation. It entered into a 
E works contract with the appellant-State for rehabilitation and improve-
ment of a certain stretch of road in the State. The Commissioner of Sales 
Tax under a composition scheme devised by the appellant-State bad 
directed deduction of 1% tax under Section 7-D and proviso to Section 8-D 
of the U.P. Trade Tax Act, 1948 from the amount payable to the respon-
dent. However, the appellant-State had deducted 4% tax from the amount 
F 
payable to the respondent. The High Court allowed the writ petition liled 
by the respondent challenging the aforesaid deduction of 4% tax and 
directed the appellant-State to deduct only one percent of tax. Being 
aggrieved the appellant-State preferred the present appeal. 
On behalf of the respondent it was contended that the appellant-
G State was not concerned with the sales tax liability of the respondent which 
was a matter between the respondent and the Sales Tax Department; that 
the obligation of the appellant was to deduct 4% from the amount payable 
to the respondent and since the said obligation was reduced from 4% to 
1 %, the appellant should deduct only one percent and pay over the balance 
H of the contract amount to the respondent; that the appellant was not 
762 
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SlATEv. BRIDGE AND ROOF CO. (!)LTD. 
763 
concerned with the order of composition made under Section 7-D(l); that A 
what all had happened under the composition order was that instead of 
ascertaining the value of the goods transferred in the execution of the 
works contract and levying tax thereon at 4%, the department had agreed 
to levy one per cent on the entire value of the contract; that this had been 
done in the interest of simplification of assessment procedure and as a 
measure of government policy; that this did not result in reduction in the 
rate of tax; that it was only a convenient and simplified formula for 
quantifying the tax; and hence there was no question of the Government 
getting the benefit of any reduction of tax. 
Dismissing the appeal, this Court 
HELD : 1. The very remedy adopted by the respondent is misconceived. 
It is not entitled to any relief in these proceedings, i.e., in the writ petition filed 
by it. The High Court appears to be right in not pronouncing upon any of the 
several contentions raised in the writ petition by botl1 the parties and in 
merely reiterating the effect of the order of the Deputy Commissioner made 
under the proviso to Section 8-D-(1) of the U.P. Trade Tax Act, 1948. More 
B 
c 
D 
than that could not have been legitimately granted in a writ petition. The writ 
petition filed by the respondent for tl1e issuance of a writ of Mandamus 
restr'dining the Government from deducting or \\ithholding a particular sum, 
which according to the respondent is payable to it under the contract, was E 
wholly misconceived and was not maintainable in law. (771-F; 772-E] 
Assistant Excise Commissioner v. Isaac Peter, [1994) 4 SCC 104, relied 
on. 
2.1. Firstly, the contract between the parties is a contract in the realm F 
of private law. It is not a statutory contract. It is governed by the provisions 
of the Contract Act, 1872 or, may be, also by certain provisions of the Sale 
of Goods Act, 1930. Any dispute relating to interpretation of the terms and 
conditions of such a contract cannot be agitated, and could not have been 
agitated, in a writ petition. That a matter either for arbitration as provided G 
by the contract of for Court, as the case may be. Whether any amount is 
due to the respondent from the app

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