Subaya Constructions Company Ltd vs The Commissioner Of Municipal ... on 1 August, 2019
Madras High Court
Subaya Constructions Company Ltd vs The Commissioner Of Municipal … on 1 August, 2019
W.P.Nos.21196 and
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 01.08.2019
Coram
THE HONOURABLE MR. JUSTICE M.SUNDAR
W.P.Nos.21196 and 21198 of 2019
Subaya Constructions company Ltd
Represented by its Managing Director
S.Chandara Gandhimathi
New No.21 (Old No.26)
Soundarapandian Street
Ashok Nagar, Chennai 600 083. … Petiti
Both W
vs.
1.The Commissioner of Municipal Administration No.31, Kamarajar Salai,
Chepauk,
Chennai 600 035.
2.The Commissioner,
Salem City Municipal Corporation
Salem – 636 001.
3.The Principle Commissioner,
GST & Central Excise,
GST Bhavan,
121, Nungambakkam High Road,
Nungambakkam, Chennai 600 034. … Respon
both W
COMMON PRAYER: Writ Petition filed under Article 226 of the Consti
India praying for issuance of a Writ of Mandamus, directing the re
1/12
W.P.Nos.2
and 2 to pay the difference percentage of 10 % GST on the original
Indian Kanoon – http://indiankanoon.org/doc/117996703/ 1
Subaya Constructions Company Ltd vs The Commissioner Of Municipal … on 1 August, 2019
contract value to this Petitioner Company and pass such or other o
Hon’ble Court may deem fit to the facts and circumstances of the c
render justice.
For Petitioner : Mr.Rishikesh for (In both W.Ps) Mr.M.Jayaprakash
For Respondents : Mr. R.P.Pratapsingh
(In both W.Ps) Government Advocate for
Mr. S.Sathish
Standing counsel for R2
Mr.K.S. Ramasamy,
Senior Standing counsel
COMMON ORDER
Mr.Rishikesh, learned counsel representing the counsel on
Writ petitioner in both the writ petitions is b
Mr.R.P.Pratapsingh, learned Government Advocate o
respondent in both the writ petitions, Mr.S.Sathish, learned Stand
for Salem City Municipal Corporation on behalf of second responden
the writ petitions and Mr.K.S.Ramaswamy, learned Standing counsel
of third respondent in both the writ petitions are before this Cou
2/12
W.P.Nos.21196
2. With consent of all the aforesaid learned counsel, mai
petitions are taken up, heard out and are being disposed of.
3. Subject matter of instant writ petitions is a contract
Indian Kanoon – http://indiankanoon.org/doc/117996703/ 2
Subaya Constructions Company Ltd vs The Commissioner Of Municipal … on 1 August, 2019
second respondent the Salem City Municipal Corporation and the wri
petitioner company. The contract is dated 23.01.2015 and this Cour
informed that the contract is for providing under ground Sewerage
(Collection System) to Salem Corporation -Package III (Zone III) (
4. In the light of the submissions made at the bar today
light of what unfurled in the hearing, the writ petitions now turn
extremely narrow compass.
5. Subject matter of the instant writ petitions is paymen
and Service Tax’ (‘GST’ for brevity) under ‘Central Goods and Serv
2017′ (‘CGST Act’ for brevity).
6. There is no disputation or disagreement before this Co
regime became operational on and from 01.07.2017. As mentioned sup
contract which forms subject matter of these two writ petitions is
3/12
W.P.Nos.21196
23.01.2015, which is prior to the GST regime. Therefore, the contr
provide for payment of GST.
7. This Court is informed that work under the said contrac
Indian Kanoon – http://indiankanoon.org/doc/117996703/ 3
Subaya Constructions Company Ltd vs The Commissioner Of Municipal … on 1 August, 2019
under way.
8. When the work was under way, the GST regime became oper
on and with effect from 01.07.2017 and therefore, writ petitioner
second respondent i.e., Salem City Municipal Corporation on 11.07.
regarding liability to pay GST. To this communication from the wri
second respondent responded vide a communication dated 10.08.2018,
reference No.Na.Ka No.38631/2014/SS1. Vide this communication, the
respondent informed the writ petitioner that GST payable is 1% as
State GST is concerned and 1% as far as Central GST is concerned.
words, it is 1% as State GST and 1% as Central GST, totalling 2%.
second respondent informed the writ petitioner that they would be
2% at the time of making payments under said contract pursuant to
is under progress. There is no disagreement before this Court that
being deducted at source (TDS) by the 2nd respondent now.
4/12
9. Adverting to the prescribed rates of GST contained in Ch
and the relevant entry viz., Heading 9954 captioned ‘Construction
is submitted that the GST liability qua aforementioned contract da
23.01.2015 is 12% and the same reads as follows:
Seri Chapter, Description of Service al Section or
No. Heading
1. ……
Indian Kanoon – http://indiankanoon.org/doc/117996703/ 4
Subaya Constructions Company Ltd vs The Commissioner Of Municipal … on 1 August, 2019
2. ……
3. Heading (i) Construction of a
9954 building, civil structure or a par
(Constructi thereof, including a complex or on on building intended for sale to a Services) buyer, wholly or partly, except
where the entire consideration has
been received after issuance of completion certificate,
required, by the
authority or after
occupation, whichever is earlier.
(Provisions of Paragraph 2 of this
notification shall apply for valua
of this service)
(ii) composite supply
contract as defined in clause 119 o
section 2 of Central Goods and Services Tax Act 2017.
(iii) Composite supply
contract as defined in clause (119
of Section 2 of the Central Goods
and Services Tax Act, 2017, Suppli
5/12
Seri Chapter, Description of Service al Section or
No. Heading
to the Central Government, State
Government, Union Territ
local authority, a Gov
authority or a Government Entity by
way of construction,
commissioning, ins
completion, fitting out,
maintenance, renovation
alteration of,—
(a) a historical mon
archaeological site or remains of
national importance, archaeological
excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);
(b) canal, dam or other irrigation
Indian Kanoon – http://indiankanoon.org/doc/117996703/ 5
Subaya Constructions Company Ltd vs The Commissioner Of Municipal … on 1 August, 2019
works;
(c) pipeline, conduit or plant for
(1)water supply, (
treatment, or (iii)
treatment or disposal
………….
10. There is no disputation or disagreement before this Court that the tax liability is 12 % for aforesaid contract.
http://www.judis.nic.in W.P.Nos.21196 and 21198 of 2019
- This has impelled the writ petitioner to file the instant writ petitions, with prayers inter alia to direct the respondents 1 and 2 to pay the difference of 10% GST on the original agreed contract value, so that the tax liability is in accordance with law that has become operational when contract was in vogue and work pursuant to the contract was in progress.
- In the light of the heading under which the instant contract which forms subject matter of instant writ petitions falls and in the light of there being no dispute that the rate of tax is 12%, it may not be necessary to advert to further details.
- What would be necessary to be resolved in these writ petitions is how the tax liability qua GST is to be paid.
- Learned counsel for Second respondent i.e., Standing Counsel for Salem Corporation drew the attention of this Court to G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017, being a Government Order issued by the Government of Tamil Nadu.
- There is a short history for this Government Order and it may be necessary to take a bird’s eye view of that history. Originally the Government http://www.judis.nic.in W.P.Nos.21196 and 21198 of 2019 issued a Government Order being G.O.Ms.No.264, Finance [Salaries] Department, dated 15.09.2017 fixing the GST on works contract for Government work at 12%. To be noted, it stood as 18 % earlier to that.
- Thereafter, a writ petition came to be filed in this Court being W.P.No.24853 of 2017 and a Hon’ble Single Judge of this Court disposed of the writ petition on 05.10.2017, directing the authorities concerned to consider the representation made by the writ petitioner therein and take a call.
- Pursuant there to, the aforesaid G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 came to be issued.
- There is a short history post Government Order also. This Government Order being G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 came to be challenged in this Court by way of W.P.No.2307 of 2018.
Indian Kanoon – http://indiankanoon.org/doc/117996703/ 6
- Subaya Constructions Company Ltd vs The Commissioner Of Municipal … on 1 August, 2019
- he challenge failed and the writ petition came to be disposed of by an order dated 28.01.2019 by a Hon’ble Single Judge of this Court. Writ petition was carried in apeal by way of an intra Court appeal being W.A.No.1499 of 2019 and the intra Court appeal also came to be dismissed by a Hon’ble Division Bench of this Court vide order dated 27.06.2019.
http://www.judis.nic.in W.P.Nos.21196 and 21198 of 2019
- This Court is informed that the aforesaid challenge to G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 has been given legal quietus and therefore, G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 is now operating. This takes us to the question as to which portion of G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 is applicable.
- Here again, the task in instant writ petition is cut out as there is no disputation that paragraph 10(a) is applicable up to 30.06.2017 and paragraph 12 is applicable post 30.06.2017 i.e., on and from 01.07.2017. Paragraphs 10(a) and 12 of G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017, read as follows ’10(a) If the supplier has furnished break up of taxes within the quoted value (bid value) at the time of submission of tenders, it shall be taken as the basis for estimating the value of subsumed tax. If, after negotiation, the contracted value is less than the bid value, the tax quoted shall be proportionately reduced to arrive at estimate of the value of subsumed tax. For instance, if the bid value was Rs.50 lakh and the break up of tax is Central Excise Duty of Rs.1 lakh and VAT or CGST of Rs. 1 lakh, the corresponding subsumed tax as per his break up of taxes is Rs.2 lakh and after negotiation, the contracted value was reduced to Rs.48 lakh, the subsumed tax shall be taken as http://www.judis.nic.in W.P.Nos.21196 and 21198 of 2019 Rs.2 lakh x 48/50=Rs.1.92 lakh.
12.The procuring entities shall negotiate existing agreements with works contractors and enter into supplemental agreements with revised agreement value fixed as the original contracted value minus the value of subsumed tax arrived in paragraph 11 above plus GST as applicable. The procuring entities shall make payment of final bills accordingly, in cases where ‘on account’ payment has been made as per Government Order first read above and any excess payment, if made ‘On account’, shall be adjusted from out of 5 percent amount retained by the procuring entities.’
- Therefore, the parties will now stand governed by paragraph 10(a) and paragraph 12 of aforesaid G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017.
- The exercise of quantification qua para 10(a) shall be completed by both the parties as expeditiously as possible within 12 weeks from the date of receipt of a copy of this order. Though obvious it is made clear that work under the aforesaid contract shall continue without being impeded by this exercise.
http://www.judis.nic.in W.P.Nos.21196 and 21198 of 2019
23. These Writ petitions are disposed of with the aforesaid observations holding that no further orders are necessary. There shall be no order as to costs.
Indian Kanoon – http://indiankanoon.org/doc/117996703/ 7
Subaya Constructions Company Ltd vs The Commissioner Of Municipal … on 1 August, 2019
01.08.2019 rri/vsm Speaking Order/Non-Speaking Order Index : Yes/No Internet: Yes/No To
- The Commissioner of Municipal Administration No.31, Kamarajar Salai, Chepauk, Chennai 600 035.
- The Commissioner, Salem City Municipal Corporation Salem-636 001.
- The Principle Commissioner, GST & Central Excise, GST Bhavan, 121, Nungambakkam High Road, Nungambakkam, Chennai 600 034.
http://www.judis.nic.in W.P.Nos.21196 and 21198 of 2019 M.SUNDAR.J., rri/vsm W.P.Nos.21196 and 21198 of 2019 01.08.2019 http://www.judis.nic.in
Indian Kanoon – http://indiankanoon.org/doc/117996703/ 8
