The respondent No. 1 of this appeal, said to be a company of engineers and builders, who had been engaged in undertaking various works contracts,responded to the tenders floated by the respondent Nos. 6 to 18 (various offices of the Government of Orissa) and, on being determined as the lowest tenderer, was awarded the contracts from time to time. It is not in dispute that the aforesaid contracts awarded to the respondent No. 1 carried the stipulations regarding taxes in Clause 45 of GCC. The claim of the respondent No. 1 for reimbursement of sales tax had been essentially based on Clause 45.2 of GCC, which carried the stipulation that any Central or State sales tax and other taxes on completed items of works (excluding penalty), as may be levied and paid by the contractor shall be reimbursed by the employer on proof of payment (and) on production of assessment certificate. The sales tax regime in the State of Orissa is primarily governed by the Act of 1947. Later on, the State Government issued a notification under Section 5 of the Act of 1947 whereby, the rate of tax payable by a dealer on the taxable turnover in respect of the works contract was increased to 8%. Thereafter, by way of the orders of assessment for the years 1998- 1999 to 2000-2001, the Assessing Authority levied sales tax @ 8% on the execution of a works contract.taxable turnover in respect of the works contracts executed by the contractor company. With reference to such assessments, the contractor company claimed reimbursement of the sales tax paid in respect of the works contracts executed by it.However, in the meantime, the Government of Orissa, in its Department of Water Resources,issued another Circular dated 27.01.2000 to the Engineers-incharge of various offices and projects that the question as to whether sales tax deducted fromt he bills of the contractor and paid to the sales tax officer will be again reimbursed to the contractor whose quoted price was inclusive of all taxes as per Clause 13.3 of the Instructions to Bidders 7, was under active consideration; and it was directed that no reimbursement of sales tax be made under Clause 45.2 of GCC until clarification was communicated in that regard.3.7.

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Circulars issued by the State Government pertaining to the subject of reimbursement of sales tax in works contracts. While noticing that diametrically opposite views were expressed by the State Government in the two main Circulars, we had observed in the earlier part of this judgment that the said Circulars were based on the given day understanding of the State Government but, we had ignored the said Circulars while dealing with the principal issues involved in this matter, but had also indicated that we shall refer to the said Circulars at a later and appropriate stage. The instructions were issued by the State Government in the said Circular dated 04.11.1986 for: (a) making reimbursement of the amount of sales tax actually paid by the contractor on production of necessary documentary evidence of such payment; (b) not making reimbursement against the amount of penalty, if any, levied upon the contractor; and (c)obtaining undertaking from the contractor to refund the excess amount of reimbursement, in case of reduction of its liability towards sales tax in appeal or revision [vide sub-paragraphs (i) to (iii) of paragraph 2 of the Circular dated 04.11.1986]. (iv) of paragraph 2 thereof, the Engineers-incharge were instructed that no such clause for reimbursement of sales tax or payment of such tax by the department to the contractor be inserted in the Notice Inviting Tenders or Tender document; and no tender containing any clause or condition to that effect be accepted. The said second set of instructions in sub-paragraph (iv) of paragraph 2 of this Circular was, obviously, meant forfuture contracts.

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The appeal fails and is, therefore, dismissed with no order as to costs. Pending interlocutory applications also stand disposed of.