Mohd. Yunush Vs State of U.P.

The case involves a petitioner represented by Sri Ramesh Singh, challenging a recovery certificate issued to him for the deposit of Goods and Service Tax (G.S.T.) related to a contract for the realization of ground rent from a fair. The contract, initiated through an auction, commenced on August 31, 2017, for a month. The recovery of G.S.T. is being pursued as arrears of land revenue through the Collector/District Magistrate of Saharanpur, based on the U.P. Goods and Service Tax Act, 2017.

The petitioner contests this recovery, arguing that the liability for G.S.T. payment lies with the Nagar Nigam (municipal corporation) as they are the ones benefiting from the contract, not the petitioner. The amount sought to be recovered, mentioned in the citation, is Rs. 10,74,000/- along with additional charges. This recovery is being pursued under the provisions of the U.P. Revenue Code, 2006, in conjunction with the U.P. Revenue Code Rules, 2016.

Representatives for both the petitioner and the respondents, including Sri C.K. Parekh representing Nagar Nigam, Saharanpur, and the learned Standing Counsel for the other respondents, have presented their arguments before the court. The core contention revolves around the allocation of liability for G.S.T. payment arising from the contract.

The excerpt discusses a legal matter concerning the recovery of taxes, particularly Goods and Services Tax (G.S.T.), from a contractor by Nagar Nigam, as per the provisions of the Act, 2017. The petitioner, who is the contractor, contends that the tax liability, including G.S.T., should be borne by the Nagar Nigam as per their agreement, which specifies that any such tax liability is the responsibility of the contractor. The petitioner argues that the tax payable is separate from the contract consideration amount and should be recovered from them accordingly.

However, Nagar Nigam argues that the entire security deposit provided by the petitioner has been adjusted towards the contract consideration, leaving the G.S.T. payment overdue. They assert that the recovery issued against the petitioner is justified, as only the G.S.T. amount remains outstanding after adjusting the security deposit.

According to Sri Parekh, the lawyer representing Nagar Nigam, after adjustments, only the G.S.T. to the tune of Rs.3,24,000/- is yet to be realized from the petitioner. He contends that the recovery citation originally included the entire amount, including the contract consideration, but now only the G.S.T. remains outstanding.

In summary, the petitioner argues that only the G.S.T. amount is recoverable from them, while Nagar Nigam maintains that the recovery is justified given the adjustment made from the security deposit. The facts regarding the outstanding G.S.T. amount are undisputed, and the recovery citation is based on these facts.

The crux of the matter revolves around the recovery of taxes, particularly Goods and Services Tax (G.S.T.), from a contractor (referred to as “the petitioner”) by the Nagar Nigam (local authority). The petitioner contests the full recovery of taxes, arguing that their liability should be limited to the outstanding G.S.T. amount. This contention is based on the adjustment of the security deposit made by the petitioner against the contract consideration, leaving only the G.S.T. outstanding.

The legal counsel for the Nagar Nigam asserts that there exists a clear agreement between the petitioner and the Nagar Nigam, stipulating that any tax liability, including G.S.T., is the responsibility of the contractor. This agreement is supported by a standard form mentioned in the advertisement, wherein clause 4 specifies the contractor’s obligation to pay taxes under the Act, 2017.

The petitioner concedes to the outstanding G.S.T. liability and offers to deposit the entire amount within one month. However, they contest the recovery citation issued by the Nagar Nigam, arguing that only the G.S.T. amount is recoverable, not the entire cited amount.

To resolve the dispute, the legal framework provided by the Act, 2017 is examined. The Act defines relevant terms such as “local authority” and “Proper Officer” and outlines the scope of supply under Chapter III for the levy and collection of taxes. It is acknowledged that the transaction between the petitioner and the Nagar Nigam falls within this scope.

The focus then shifts to the mode and manner of recovery, particularly regarding G.S.T. The counsel for the Nagar Nigam refers to Section 79 of the Act, 2017, emphasizing subsections (a), (b), and (e), which allow for the recovery of tax liabilities from the concerned person, as payable by them under the Act.

In conclusion, while the petitioner acknowledges their liability for the outstanding G.S.T., they contest the full recovery of taxes and advocate for the recovery limited to the G.S.T. amount. The legal discourse centers on interpreting the contractual agreement, statutory provisions, and the appropriate mode of recovery under the Act, 2017.

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