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2020 (5) TMI 686 - HC - GSTLevy of GST in addition to licence fee - 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 - HELD 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 - 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. The 3rd 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 - the impugned proceedings issued by the 3rd respondent are liable to be set aside - Petition allowed.
Issues:
1. Demand for payment of Goods and Service Tax (GST) by respondent Corporation from petitioner for maintenance work. 2. Legal obligation of petitioner to pay GST on licence fee. 3. Interpretation of clause 43 of the Deed of Licence regarding GST payment. 4. Exemption of GST under relevant notifications issued by Central and State Governments. 5. Legality and arbitrariness of respondent Corporation's action in demanding GST. 6. Validity of impugned proceedings dated 19.01.2019. Issue 1: Demand for payment of Goods and Service Tax (GST) by respondent Corporation from petitioner for maintenance work. The petitioner, an organization maintaining toilets in a bus station, challenged the respondent Corporation's demand for GST payment along with the monthly licence fee. The petitioner argued that being a non-registered dealer under the GST Act, they were not liable to pay GST on the licence fee. The respondent Corporation, however, contended that the petitioner had agreed to pay GST as per the agreement terms. Issue 2: Legal obligation of petitioner to pay GST on licence fee. The respondent Corporation maintained that as per the agreement, the petitioner was obligated to pay GST along with the licence fee. The Corporation claimed that the petitioner had agreed to pay the enhanced licence fee, which included GST, and had already made payments towards the same. Issue 3: Interpretation of clause 43 of the Deed of Licence regarding GST payment. Clause 43 of the Deed of Licence stipulated that the petitioner was responsible for paying GST on the licence fee. The respondent Corporation argued that this clause mandated the payment of GST by the petitioner to avoid audit objections and comply with statutory requirements. Issue 4: Exemption of GST under relevant notifications issued by Central and State Governments. The petitioner cited notifications exempting GST on services related to public conveniences, including toilet maintenance. The Central and State Governments had issued notifications exempting GST on such services, which the petitioner argued should apply to their case. Issue 5: Legality and arbitrariness of respondent Corporation's action in demanding GST. The petitioner contended that the respondent Corporation's insistence on GST payment was illegal and arbitrary, as it contravened the notifications exempting GST on the services provided by the petitioner. The Corporation's actions were deemed as contrary to statutory provisions and binding notifications. Issue 6: Validity of impugned proceedings dated 19.01.2019. The Court found that the respondent Corporation's demand for GST payment was based solely on the licence deed and did not consider the relevant notifications exempting GST. The Court held that the Corporation's actions were illegal, arbitrary, and in violation of the notifications issued by the Governments. Consequently, the impugned proceedings were set aside, and the writ petition was allowed with costs awarded to the petitioner. This detailed analysis of the judgment highlights the key issues raised, arguments presented by both parties, and the Court's findings regarding the demand for GST payment and the legality of the Corporation's actions.
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