2025 (1) TMI 715 - HC - GST

Seeking release the admitted liability towards the difference of GST amount along with interest - HELD THAT - The petitioner is entitled to the GST difference and interest, the writ petition was maintainable, and the respondent was liable for the enhanced GST rate. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the petitioner is entitled to a writ of mandamus directing the respondent to release the admitted liability towards the difference in GST amount, enhanced from 12% to 18%, along with interest.
• Whether the petitioner should be relegated to the Dispute Resolution Forum as provided under the agreement due to the availability of an alternative remedy under the Arbitration Act.
• Whether the respondent, being a government entity, is liable to pay the enhanced GST rate as per the notifications issued under the GST Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Writ of Mandamus for GST Difference

• Relevant Legal Framework and Precedents: The petitioner invoked Article 226 of the Constitution of India, seeking a writ of mandamus. The legal framework includes the Goods & Services Tax Act (GST Act) and relevant notifications, particularly Notification No.24/2017 CT(R) and Notification No.15/2021 CT(R), which altered the GST rate from 12% to 18%.
• Court's Interpretation and Reasoning: The court noted that the petitioner had been paying GST at the enhanced rate of 18% from 01.01.2022, while the respondent continued to reimburse at 12%. The court found that the respondent had acknowledged the liability to pay the additional 6% but had not acted upon it due to pending approval from the State Government.
• Key Evidence and Findings: The court relied on the respondent's letter dated 26.09.2022, which admitted the liability for the additional GST amount but cited lack of approval as the reason for non-payment.
• Application of Law to Facts: The court applied the GST notifications to the facts, establishing that the petitioner was entitled to the difference in GST payments, as the statutory rate had increased.
• Treatment of Competing Arguments: The respondent's argument regarding the lack of approval from the State Government was dismissed, as the liability was already acknowledged.
• Conclusions: The court directed the respondent to pay the GST difference of 6% from 01.01.2022 to 30.09.2022 within three months, failing which interest at 6% per annum would apply.

Issue 2: Alternative Remedy under the Arbitration Act

• Relevant Legal Framework and Precedents: The respondent raised the issue of maintainability of the writ petition, citing the availability of an alternative remedy under the Arbitration Act.
• Court's Interpretation and Reasoning: The court found that no disputed questions of fact were involved, which negated the necessity to refer the matter to arbitration.
• Key Evidence and Findings: The court noted that the GST rate change was a statutory obligation, not a contractual dispute, thus not requiring arbitration.
• Application of Law to Facts: The court applied principles of writ jurisdiction, emphasizing that clear statutory obligations do not necessitate arbitration.
• Treatment of Competing Arguments: The court dismissed the respondent's objection regarding arbitration, reinforcing the appropriateness of the writ petition.
• Conclusions: The court held that the writ petition was maintainable, given the absence of factual disputes and the statutory nature of the GST obligation.

Issue 3: Liability of Government Entity for Enhanced GST Rate

• Relevant Legal Framework and Precedents: The GST Act and the relevant notifications were central to determining the liability of the government entity (respondent) to pay the enhanced GST rate.
• Court's Interpretation and Reasoning: The court interpreted the notifications as binding on the respondent, a government entity, to comply with the enhanced GST rate.
• Key Evidence and Findings: The court referred to the State GST Department's acknowledgment of the GST rate change and its applicability to the respondent.
• Application of Law to Facts: The court applied the GST notifications to affirm the respondent's liability for the enhanced rate.
• Treatment of Competing Arguments: The respondent's argument about awaiting state approval was not sufficient to negate the statutory obligation.
• Conclusions: The court concluded that the respondent was liable to pay the enhanced GST rate, as per the statutory notifications.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "In view of the above, respondent No.2 is directed to pay the difference of GST amount to the petitioner @ 6% from 01.01.2022 to 30.09.2022 with a period of three months from the date of receipt of certified copy of this order, failing which the petitioner shall be entitled for interest @ 6% per annum from the date of entitlement."
• Core Principles Established: The court reinforced that statutory obligations under the GST Act are binding on government entities, and acknowledged liabilities must be fulfilled irrespective of internal approvals.
• Final Determinations on Each Issue: The court determined that the petitioner was entitled to the GST difference and interest, the writ petition was maintainable, and the respondent was liable for the enhanced GST rate.