K Ananthakrishna Shetty vs. Mangalore Mahanagara Palike

Held

The Court held that the obligation to pay GST by the supplier of goods and services is clear under Section 9 of the Central Goods and Services Tax Act, 2017. Section 33 of the Act mandates that the amount of tax is to be indicated in the tax invoice. The Court also noted the petitioner's contention that the contract rates were inclusive of taxes, as per Clause 35 of Annexure-B, and directed the respondent authorities to consider this aspect. The Court found that the petitioner's representation to include the GST component in invoices for works executed after July 1, 2017, is to be considered appropriately by the respondent authorities in light of the statutory liability and the contract terms. If the obligation imposes a liability on the petitioner, the representation is to be taken note of and disposed of in accordance with law. The petition was disposed of with directions for consideration.

Facts

The petitioner, K. Ananthakrishna Shetty, a Class I contractor, was awarded public projects by respondents 1 and 2, Mangalore Mahanagara Palike and Town Municipal Council, Karkala. The petitioner executed works and raised bills, including the Goods and Services Tax (GST) component for services rendered after July 1, 2017. However, the respondent authorities orally declined to consider these invoices for payment unless the GST component was excluded. The petitioner made representations to include the GST component in the invoices and honor the bills. The contract terms, as per Annexure-B, Clause 35, stipulated that quoted rates were inclusive of taxes.

Key Issues

1. Whether the respondent authorities are legally obligated to consider invoices that include the GST component for payments to the petitioner, given the statutory liability to pay GST and the contract terms. Petitioner's arguments: The petitioner contended that as per Section 9 of the Central Goods and Services Tax Act, 2017, there is a statutory obligation to levy and collect GST. Furthermore, Clause 35 of the contract (Annexure-B) stated that the quoted rates were inclusive of taxes, obligating the petitioner to include the tax component in the invoice. The petitioner relied on the principle that statutory liabilities must be honored. Revenue/State's arguments: The respondent Municipal Authority submitted that if the petitioner is legally liable to pay GST, they would be obliged to take note of this legal obligation when considering the invoices.