M/S.Tirumala Social Services Orgnization vs. The State Of Ap

Held

The Court held that the impugned proceedings dated 28.02.2019 issued by the 3rd respondent are liable to be set aside. The Court found that the petitioner was awarded a work contract for the maintenance of toilet blocks, and services provided under Heading 9994, "Services by way of public convenience such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets," are exempted from GST by both the Central Government Notification No. 12/2017-Central Tax (Rate) and the State Government G.O.Ms.No.588. The Court reasoned that these notifications, issued in exercise of powers under Section 11(1) of the CGST Act, 2017, prevail over the terms and conditions of the license deed. The 3rd respondent's rejection of the petitioner's representation was based solely on the license deed without considering the overriding statutory exemptions, making the action illegal and arbitrary. The Court deprecated the 3rd respondent's stance of waiting for further guidelines instead of applying the existing exemptions. The ratio is that statutory exemptions granted by government notifications override conflicting contractual clauses.

Facts

The petitioner, M/s. Tirumala Social Service Organisation, was awarded a contract for the maintenance of toilets at the Badvel Bus Station for a monthly license fee of Rs. 46,200/-. Clause 47 of the license agreement stipulated that the petitioner must pay GST at 18% (9% CGST and 9% SGST) in addition to the license fee. The petitioner paid GST for a period. Subsequently, the petitioner became aware of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and G.O.Ms.No.588 dated 12.12.2017, which exempted GST on services under Heading 9994 (public conveniences like toilets). The petitioner made a representation to the 3rd respondent (authority from the respondent corporation) to cease collecting GST, but it was rejected solely based on Clause 47 of the agreement. This led to the filing of the present writ petition.

Key Issues

1. Whether the impugned proceedings dated 28.02.2019 issued by the 3rd respondent, rejecting the petitioner's representation for GST exemption, are illegal, arbitrary, and contrary to the exemptions granted by the Government of India and the Government of Andhra Pradesh? The petitioner argued that the 3rd respondent failed to consider the Central Government Notification No. 12/2017-Central Tax (Rate) and G.O.Ms.No.588, which provide exemption for services related to public conveniences like toilets under Heading 9994. The petitioner contended that these statutory notifications override Clause 47 of the license deed, making the demand for GST illegal and arbitrary. The petitioner relied on the principle that statutory notifications issued under Section 11(1) of the CGST Act, 2017, are binding and prevail over contractual clauses. The respondent corporation argued that the petitioner is liable to pay GST as per Clause 47 of the license agreement. They contended that the exemption notifications are not binding on them unless clear guidelines are issued by the GST authorities, and therefore, the exemption cannot be granted.