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2020 DIGILAW 408 (AP)

Dhanoosh Economically v. APSRTC

2020-05-29

M.GANGA RAO

body2020
JUDGMENT M. Ganga Rao, J. - The petitioner, M/s. Dhanoosh Economically Poor People Seva Samithi, represented by its Executive Member, filed this writ petition seeking to issue writ of mandamus to declare the action of the respondents in demanding the petitioner to pay Goods and Service Tax (GST) vide letter dated 19-01-2019 issued by the respondent Corporation whereby and whereunder the respondent Corporation demanding the petitioner for payment of GST in respect of its business for the work of contract of maintenance of toilets in the Bus Station, Guntur, including all offices of the Bus Station on a monthly licence fee of Rs.2,76,666/-. 2. The case of the petitioner is that the petitioner's firm was maintaining Toilets in the Bus Station, Guntur, including all offices of the Bus Station, on a monthly licence fee of Rs.2,76,666/- and the period of contract is for two years commencing from 19-02-2017 to 18-02-2019, which is extendable for a further period of two years subject to enhancement of licence fee by 10% over previous year's licence fee and the said contract period was extended for a period of one year. The 2nd respondent has been collecting GST from the petitioner on its licence fee from the date of commencement of its work. About three months back, when the petitioner wanted to pay licence fee in respect of its work, the 2nd respondent refused to receive licence fee without GST and insisted to pay GST along with monthly licence fee vide letter dated 19-01-2019. The petitioner's firm is not registered dealer under the GST Act and is not liable to 3pay GST on the amount of licence fee. However, the Commercial Tax Authorities never issued any notice to pay GST. If at all, the petitioner is liable to pay GST, it is only the Commercial Department to demand to pay GST, but not the respondent authorities. The petitioner further stated that in a batch of similar writ petitions i.e. W.P.No.16565 of 2018, 14614 of 2018, 19581 of 2018 and 20057 of 2018, this court issued interim direction directing the respondents to collect the licence fee from the licence holders of the stalls without insisting payment of GST. Aggrieved by the action of the respondent Corporation in insisting payment of GST in addition to licence fee, the present writ petition came to be filed. 3. Aggrieved by the action of the respondent Corporation in insisting payment of GST in addition to licence fee, the present writ petition came to be filed. 3. The Law Officer of the respondent Corporation filed counter on behalf of the respondent Corporation stating that the petitioner was allotted outsourcing contract for maintenance of entire Toilet block (Contract for Sanitary) at NTR Bus Station, Guntur, on payment of monthly licence fee of Rs.2,76,666/- (excluding water and electrical charges) for a period of two years from the date of agreement vide Allotment Order No.M1/122(1)/2016-GNT.2, dated 04.02.2017 subject to the terms and conditions stipulated in the agreement. From the inception of allotment of work, no amount of GST was collected from the petitioner. The aforesaid agreement was expired on 18-02-2019 as per the allotment order and agreement between the petitioner and the respondent Management. The petitioner's firm has agreed to pay enhanced licence fee (duly enhanced from Rs.2,76,666/- to Rs.3,04,333/- (by increasing 10% on the old licence fee) + GST 18% amount of Rs.54,778/-, thus amounting to a total of Rs.3,59,111/- in writing vide letter dated 19.02.2019. As such, the amount of Rs.1,28,254/- (Licence Fee of Rs.1,08,690/- + Rs.19,564/- GST amount) was paid towards Licence fee during the period from 19.02.2019 to 28.02.2019 including GST vide M.R.No.18/118284, dated 14.03.2019. The respondent Corporation further stated that as per Clause 43 of the Deed of Licence i.e., outsourcing contract on nomination basis between APSRTC and the petitioner vide letter dated 19.02.2019, the service tax/GST applicable, if any, shall be borne only by the licencee at the rate as communicated by the Government from time to time, and hence, it is mandatory on the part of the licensor to collect GST with licence fee from the licensee to avoid further audit objections and objections, if any, from the Income Tax Department. However, the petitioner can obtain GST number from the Income Tax Department and may remit GST amount directly to the Department, in which case, the payment particulars and necessary paid challans shall be produced for record purpose and audit, but the petitioner has not furnished any payment particulars of GST nor any other information. The petitioner's firm itself agreed to pay GST with licence fee and by virtue of agreement, the petitioner has to pay GST for 10 days. The petitioner's firm itself agreed to pay GST with licence fee and by virtue of agreement, the petitioner has to pay GST for 10 days. The petitioner had paid licence fee for the month of March, 2019 for an amount of Rs.3,71,573/- (Rs.3,04,333/- licence fee + penalty imposed for late payment of Rs.21,312/- + Electrical charges of Rs.42,828/- + Penalty imposed for late payment of Electrical charges of Rs.1,643/- + fine of Rs.5,000/- vide M.R.No.18/118516, dated 10.05.2019. As such, GST amount was not collected by the respondents. The respondent Corporation had informed the petitioner vide letter dated 19.01.2019 to pay GST right from the allotment of the contract work, as the petitioner is under statutory obligation to pay GST as per law in force and as agreed by the petitioner at the time of allotment of work on nomination basis. 4. Sri S.M. Subhani, learned counsel for the petitioner would contend that the respondent Corporation issued impugned letter dated 19.01.2019 without application of mind and contrary to the notifications issued by the Central Government dated 28.06.2019. As per the notifications, the payment of GST was exempted under Heading 9994 at S.No.76 which refers to "Service by way of public conveniences such as provision of facilities of bathroom, washroom, lavatories, urinal or toilets" are exempted and the same exemption is granted by the State Government vide G.O.Ms.No.588 Revenue (Commercial Taxes-II) Department, dated 12.12.2017. As per the notification and G.O., the petitioner is exempted from the payment of GST on the licence fee payable to the respondent Corporation for maintenance of toilets in the bus station. The action of the respondent Corporation in insisting for payment of GST along with monthly licence fee as per clause 43 of the deed of licence is illegal and arbitrary as the notification and G.O. issued by the competent authority are binding on the 3rd respondent and they override clause 43 of the Deed of licence. It is settled law that the statutory notifications issued by the Government prevails over the terms and conditions of the contract agreement. Hence, the notifications issued by the Central Government exercising the power under sub-section (1) of Section 11 of the Central Goods and Service Tax Act, 2017 and G.O.Ms.No.588, dated 12.12.2017 are binding on the 3rd respondent. It is settled law that the statutory notifications issued by the Government prevails over the terms and conditions of the contract agreement. Hence, the notifications issued by the Central Government exercising the power under sub-section (1) of Section 11 of the Central Goods and Service Tax Act, 2017 and G.O.Ms.No.588, dated 12.12.2017 are binding on the 3rd respondent. Instead of exempting the petitioner from payment of GST and asking the petitioner to pay GST as per clause 43 of the licence fee by way of impugned letter dated 19.01.2019 is illegal and arbitrary. 5. Per contra, P. Durga Prasad, learned standing counsel for the respondent Corporation, while reiterating the averments of the counter, would contend that the petitioner was entrusted the contract work for maintenance of toilets in the Bus Station, Guntur. As per the licence deed, the petitioner has to pay monthly licence fee along with GST as per clause 43 of the deed of licence. Unless clear guidelines are issued by the GST authorities, the notification dated 28.06.2017 under G.O.Ms.No.588, dated 12.12.2017 are not binding on the respondents. The payment of GST by the petitioner cannot be exempted. Hence, the writ petition is misconceived and is liable to be dismissed. 6. In the facts and circumstances of the case and considering submissions of the learned counsel and on perusal of the record, this court found that the petitioner was entrusted with the work contract of maintenance of toilets in the Bus Station, Guntur by licence deed dated 19.02.2017 from 19.02.2017 to 18.02.2019 extendable to one year subject to satisfactory performance of the contract by the petitioner on a monthly enhanced licence fee payable to the Corporation by collecting user charges from the toilet users. As per clause 43 of the licence deed, the petitioner is liable to pay 18% towards GST (9% of Central GST and 9% of State GST) in addition to the licence fee. But, as per Notification No.12/2017- Central Tax (Rate), dated 28-06-2017 issued by the Central Government and G.O.Ms.No.588, Revenue (Commercial Taxes-II) Department, dated 12-12-2017 issued by the Government of Andhra Pradesh. But, as per Notification No.12/2017- Central Tax (Rate), dated 28-06-2017 issued by the Central Government and G.O.Ms.No.588, Revenue (Commercial Taxes-II) Department, dated 12-12-2017 issued by the Government of Andhra Pradesh. A perusal of the said notification as well as the G.O. makes it clear that both the Central Government and the State Government, in exercise of the power conferred by sub-section (1) of Section 11 of the Central Goods and Service Tax, 2017, on the recommendations of the Council, in the public interest, the intraState supply of services of description specified under Heading 9994 "Services by way of public convenience such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets" are exempted from payment of GST. Accordingly, the work contract of maintenance of toilet blocks at the 3rd respondent Depot awarded to the petitioner comes within the purview of the exemption granted by the Central Government as well as the State Government. The said notification and the G.O. prevail over the terms and conditions of the licence deed. On perusal of the impugned proceedings dated 19.01.2019, this court found that the 3rd respondent issued the said proceedings only based on the licence deed and without reference to the Notification and the G.O. It is well settled that any clauses and the terms and conditions in the agreement or licence deed, which are contrary to the provisions of law and the notifications issued by the Governments, could not bind the parties to the agreement. Therefore, the action of the respondents in insisting payment of GST as per clause 43 of the licence deed is found to be illegal, arbitrary and contrary to the Notification and the G.O. It is also found that instead of exempting the petitioner from payment of GST, the 3rd respondent stated that the Central Government and the State Government has to issue guidelines in respect of the same. Such arbitrary action of the 3rd respondent needs to be deprecated. The 3 rd respondent being the class-I officer of the respondent Corporation is under obligation to consider the purport of the notifications and the orders issued by the competent authority granting exemptions from payment of GST by the petitioner as he is supported by well competent legal department and legal advisors, instead of driving the petitioner to this court. 7. The 3 rd respondent being the class-I officer of the respondent Corporation is under obligation to consider the purport of the notifications and the orders issued by the competent authority granting exemptions from payment of GST by the petitioner as he is supported by well competent legal department and legal advisors, instead of driving the petitioner to this court. 7. In view of above discussion, the impugned proceedings dated 19.01.2019 issued by the 3rd respondent are liable to be set aside. 8. Accordingly, the writ petition is allowed by setting aside the impugned proceedings 19.01.2019, with costs of Rs.5,000/- payable by the 3rd respondent to the Andhra Pradesh State Legal Services Authority, within a period of four weeks from the date of receipt of a copy of the order. However, the petitioner is given liberty to make a representation for refund of GST amount collected from the petitioner. 9. As a sequel thereto, miscellaneous petitions, if any, pending shall stand closed.