Sri Ganapathy And Co. VS Chief Engineer (H) Construction And Maintenance Chennai

Mr. G. Surya Narayanan, the learned counsel on record for the writ petitioner, Mr. R.P. Pratap Singh, the learned Government Advocate who accepted notice on behalf of Respondents 1 to 3, and Mr. K.S. Ramaswamy, the learned Standing Counsel who accepted notice on behalf of the fourth respondent, were present before the Court.

With the consent of all the aforementioned learned counsel, the main writ petition was taken up for consideration.

It was submitted, without dispute, that the current matter falls directly within the principle established in the Court’s order dated August 1, 2019, in W.P. Nos. 21196 and 21198 of 2019.

Mr. G. Surya Narayanan, the learned counsel on record for the writ petitioner Mr. R.P. Pratap Singh, and Mr. K.S. Ramaswamy, the learned Standing Counsel, are present before the Court. The main writ petition is taken up with the consent of all the aforementioned counsels.

The matter at hand concerns the payment of Goods and Service Tax (GST) under the Central Goods and Services Tax Act, 2017 (CGST Act). It is agreed by all parties that the issue is directly addressed by a previous order dated 01.08.2019 in W.P.Nos. 21196 and 21198 of 2019. Relevant paragraphs from this order (5 to 20) are cited:

1. The subject matter of the petitions is the payment of GST under the CGST Act.

2. It is acknowledged that the GST regime became operational on 01.07.2017. However, the contract in question is dated 23.01.2015, predating the GST regime, and does not provide for the payment of GST.

3. Work under the contract is ongoing.

4. During the progress of the work, the GST regime came into effect on 01.07.2017. The writ petitioner, on 11.07.2018, wrote to the second respondent, Salem City Municipal Corporation, regarding the liability to pay GST. In response, the second respondent, through a communication dated 10.08.2018, informed the writ petitioner that GST payable is 1% State GST and 1% Central GST, totaling 2%. Accordingly, the second respondent indicated that they would deduct 2% at the time of making payments under the contract.

5. It is acknowledged that 2% tax is being deducted at source (TDS) by the second respondent.

The petitioners argue that the contract predates the GST regime and therefore GST should not be applicable. The respondents have countered this by stating the deduction of 2% TDS in accordance with GST rates. The matter is being deliberated in light of the previous court order and the arguments presented by both sides.

Mr. G. Surya Narayanan, the learned counsel on record for the writ petitioner, Mr. R.P. Pratap Singh, the learned Government Advocate representing Respondents 1 to 3, and Mr. K.S. Ramaswamy, the learned Standing Counsel for the fourth respondent, appeared before the Court. With the consent of all the counsel, the main writ petition was taken up for consideration.

The matter at hand concerns the payment of Goods and Services Tax (GST) under the Central Goods and Services Tax Act, 2017 (CGST Act). It is agreed that the contract in question predates the GST regime, being dated 23.01.2015, while GST became operational on 01.07.2017. The writ petitioner had written to the second respondent, Salem City Municipal Corporation, on 11.07.2018, regarding the liability to pay GST, to which the second respondent responded on 10.08.2018. The second respondent informed the writ petitioner that GST payable is 1% as State GST and 1% as Central GST, totaling 2%. Consequently, the second respondent has been deducting 2% as tax deducted at source (TDS) from payments under the contract.

The writ petitioner contends that the tax liability for the contract should be 12%, as per the prescribed rates of GST. This led to the filing of the instant writ petitions, seeking, among other things, a direction for respondents 1 and 2 to pay the difference of 10% GST on the original agreed contract value, to ensure compliance with the law that was in force when the contract was active and work was ongoing.

The focus of the writ petitions is on how the GST liability should be settled. The Standing Counsel for Salem Corporation referred to Government Order G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017, issued by the Government of Tamil Nadu. This order followed a history that began with G.O.Ms.No.264, Finance [Salaries] Department, dated 15.09.2017, which initially fixed the GST on works contracts for government work at 12%, reduced from 18%. Subsequently, a writ petition (W.P.No.24853 of 2017) resulted in a direction from a Hon’ble Single Judge of the Court on 05.10.2017, urging authorities to consider representations made regarding this matter.

In essence, the writ petitions aim to resolve the issue of how the GST liability pertaining to the contract should be discharged, considering the history of government orders and the prescribed GST rates.

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