Case Title | Coimbatore Corp. Contractore Welfare Association vs State Of Tamil Nadu |
Court | Madras High Court |
Honorable Judges | Justice T. S. Sivagnanam |
Citation | 2017 (10) GSTPanacea 3 HC Madras W.P No.24851 o f 2017 |
Judgement Date | 05-October-2017 |
The petitioner, an association registered under the Tamil Nadu Societies Act, represents road contractors involved in projects for national highways and governmental organizations. Traditionally, contractors remitted 2% tax on the value of works under the Tamil Nadu Value Added Tax, 2006. However, issues arose after the implementation of the Central Goods and Services Tax Act, 2017 from July 1, 2017.
The petitioner contends that they have submitted multiple representations to the respondents, seeking resolution regarding the taxation on works contracts. Specifically, they request the consideration and issuance of orders on representations dated July 5, 10, and 11, 2017, and September 11, 2017. They seek a directive for the payment of 12% Goods and Services Tax (GST) in addition to the value of work done for various types of works contracts:
1.Contracts initiated before July 1, 2017, where work is still in progress.
2.Tenders called and agreements executed after July 1, 2017, without provisions for GST in the estimates and tender documents.
3.Future tenders, where the petitioner requests the inclusion of 12% GST provisions in the estimates, to be paid in addition to the value of work done, following the precedent set by the Southern Railways.
The petitioner’s legal representation, Mr. S. Doraisamy, argues for the petitioner, while Mr. A. Sri Jayanthi acts as the Special Government Pleader for respondents R1 to R4, and Mr. K. Venkatesh represents respondents R5 and R6 as the Government Advocate for Taxes.
In response, the Court, after considering the arguments and representations, notes the petitioner’s status as a registered association under the Tamil Nadu Societies Act and their representation of contractors working on governmental projects. The Court acknowledges the historical taxation structure under the Tamil Nadu Value Added Tax Act, 2006, where contractors remitted 2% tax on the value of works.
However, issues arose post the implementation of the Central Goods and Services Tax Act, 2017, effective July 1, 2017. The Central Government issued a notification on August 22, 2017, stipulating a 6% tax leviable by the Central Government towards works contracts.
In essence, the petitioner seeks clarity and resolution regarding the application of GST to works contracts, including retroactive application, tender provisions, and future estimations. The Court’s order on this matter is awaited, following the legal proceedings and arguments presented by both parties.
The petitioner, represented by Mr. S. Doraisamy, filed a petition under Article 226 of the Constitution of India seeking the issuance of a Mandamus. This Mandamus would direct the 1st respondent to consider and pass orders on the petitioner’s representations dated 05.07.2017, 10.07.2017, 11.07.2017, and 11.09.2017. These representations requested payment of 12% GST in addition to the value of work done for all works contracts. The contracts in question fall into three categories: those with agreements executed prior to 01.07.2017 and work in progress, those with tenders and agreements executed after 01.07.2017 without GST provisions, and those where 12% GST provisions need inclusion in future estimates and payments, mirroring the process of the Southern Railways.
The petitioner, an association registered under the Tamil Nadu Societies Act, represents road contractors working with National Highways and other governmental bodies. Before the enactment of the Central Goods and Services Tax Act, 2017, contractors remitted 2% tax under the Tamil Nadu Value Added Tax, 2006, for works executed by them. However, issues arose post the implementation of the Central Goods and Services Tax Act, prompting the petitioner to submit representations.
On 22.08.2017, the Central Government issued a notification stating that 6% tax is leviable towards Works Contract. Additionally, the State Government retained the power to levy works contract tax, making contractors liable for a total of 12% tax towards works contracts.
The petitioner submitted representations on various dates, asserting that contracts executed before 01.07.2017 should not be subject to GST, and only 2% VAT should apply. Alternatively, if compelled to pay more than 2%, the petitioner argued that the respondents should remit the GST as per the notification.
Following a directive from the court on 18.09.2017, the petitioner impleaded the Secretary to Government, Commercial Taxes Department, and the Commissioner of Commercial Taxes. The government, through Mr. K. Venkatesh, indicated that discussions were ongoing regarding the petitioner’s relief.
However, since the petitioner’s representations remained unanswered, the court deemed it appropriate for the respondents, particularly the Commissioner of Commercial Taxes, to address the issues raised. The court noted that other authorities, such as the departments of Highways and National Highways, might not be equipped to address the petitioner’s concerns specifically.
The court was apprised of Government Order No.264, Finance [Salaries] Department, dated 15.09.2017, which addressed the GST on works contracts. This order was prompted by representations from contractors concerning the initially notified 18% GST rate on government works contracts.
In summary, the petitioner seeks a Mandamus directing the consideration and response to their representations regarding GST on works contracts. The court emphasizes the importance of addressing these concerns, especially considering the implications for contractors working on government projects.
The petitioner, an association registered under the Tamil Nadu Societies Act, has filed a petition under Article 226 of the Constitution of India, seeking a Mandamus to direct the 1st respondent to consider and pass orders on their representations dated 05.07.2017, 10.07.2017, 11.07.2017, and 11.09.2017. These representations concern the payment of 12% Goods and Services Tax (GST) in addition to the value of work done for various works contracts. These contracts include those where agreements were executed before 01.07.2017 and are still in progress, as well as tenders called and agreements executed after 01.07.2017 without GST provisions in the estimate and tender.
The petitioner asserts that after the enactment of the Central Goods and Services Tax Act, 2017, certain complications arose, prompting them to submit representations. They argue that while the Central Government notified a 6% tax on works contracts, the State Government is empowered to levy an additional tax, resulting in a total of 12% tax on works contracts.
The petitioner contends that their representations have not been considered, and no orders have been passed. They argue that if compelled to pay anything beyond the 2% VAT, as stipulated under the previous tax regime, the respondent should bear the burden of remitting the GST as per the notification.
During the hearing, it was directed that the Secretary to Government, Commercial Taxes Department, and the Commissioner of Commercial Taxes be impleaded as respondents. The Government Advocate informed the court that discussions were ongoing regarding the relief entitled to the petitioner/association.
The court ordered the Commissioner of Commercial Taxes to respond to the petitioner’s representations within four weeks and to provide the petitioner with a personal hearing. Additionally, the petitioner was instructed to communicate copies of their representations and the court’s order to the Commissioner for compliance.
In summary, the petitioner seeks judicial intervention to compel the respondents to address their representations regarding the payment of GST on works contracts and ensure proper consideration and resolution of their concerns by the relevant authorities.
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