2020 (5) TMI 687 - HC - GST

Levy of GST - demand of tax at 18% - monthly licence fee collected from the petitioner for the work of contract of maintenance of toilets in addition to the monthly licence fee - N/N. 12/2017-Central Tax (Rate), dated 28.06.2017 and G.O.Ms.No.588, dated 12.12.2017 issued by Revenue (Commercial Taxes-II) Department, Government of Andhra Pradesh - HELD THAT - The work contract of maintenance of toilet blocks at the 4th 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 28.12.2019, 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 the clauses and the terms 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 47 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 for the services rendered by the petitioner, as he is supported by well competent legal department and legal advisors, instead of driving the petitioner to this court. The writ petition is allowed by setting aside the proceedings, with costs of ₹ 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.

Summary

Issues:
Challenge to imposition of GST on monthly license fee for maintenance of toilets in a bus station based on exemption notifications issued by Central and State Governments.

Analysis:
The petitioner, a registered society, sought a writ of mandamus to challenge the imposition of Central GST and State GST at 18% on the monthly license fee for maintaining toilets in a bus station. The petitioner argued that the exemption notifications by the Central and State Governments under Heading 9994 exempted GST for services related to public conveniences like toilets. The petitioner contended that the notifications should override the clause in the license agreement requiring GST payment. The respondent Corporation, however, argued that unless clear guidelines were issued by GST authorities, the notifications were not binding, and the petitioner must pay GST as per the agreement.

The court examined the facts and found that the petitioner was contracted to maintain toilets at a bus station, with the agreement stipulating payment of GST in addition to the monthly fee. However, the court noted that the exemption notifications by the Central and State Governments exempted services related to public conveniences from GST. The court held that the notifications prevailed over the terms of the agreement, and the respondent's insistence on GST payment was illegal and arbitrary. The court criticized the respondent for not considering the notifications and for suggesting that guidelines were needed from the governments.

Consequently, the court set aside the respondent's proceedings requiring GST payment and allowed the writ petition. The respondent was directed to pay costs to the Andhra Pradesh State Legal Services Authority. The petitioner was granted the liberty to seek a refund of the GST amount collected. Any pending miscellaneous petitions were to be closed as a result of the judgment.