P. Kishore vs. Telangana State Road Transport Corporation

WP/35683/2021HC TelanganaGSTCNR HBHC01055766202118 April 2022Bench: A.ABHISHEK REDDY15 pages

For Petitioner: SRI.C.RAMACHANDRA RAJUFor Respondent: SRI.N.VASUDEVA REDDY (SC FOR TSRTC)

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Facts

The petitioner, P. Kishore, held a license for a cloakroom stall at MGBS, Hyderabad, from July 24, 2019, to January 23, 2024, with a monthly license fee of Rs. 40,202/-. The Telangana State Road Transport Corporation (TSRTC) issued a notice on November 22, 2021, terminating the petitioner's license for non-payment of GST on the license fee from January 24, 2019, to November 2021. The petitioner contended that no show-cause notice was issued and that the license fee was inclusive of GST. Separately, the petitioner sought remission of license fees for May and June 2021 (second COVID-19 lockdown period) and for the TSRTC employees' strike period (October-November 2019), and also challenged the demand for full license fees during the pandemic. The TSRTC had previously issued proceedings on September 4, 2021, allowing licensees to pay license fees for May-August 2021 in installments without penal interest.

Held

The Court held that the petitioner's contention that the termination notice was illegal for want of a show-cause notice was untenable because the license deed itself provided for termination in case of default. Regarding the GST payment, the Court found that Clause 6(a) and (e) of the Deed of License explicitly stated that the license fee was exclusive of GST and that the licensee was obligated to pay applicable GST. The Court noted that the petitioner had signed this deed and could not escape liability for GST merely because the respondent Corporation had not demanded it for three years, attributing this to a lapse on the Corporation's part. The Court directed the petitioner to pay the GST amount and other dues as stipulated in the termination notice within one month, failing which the termination notice would stand. For the second writ petition concerning license fee remission, the Court held that since the Corporation had already taken a policy decision to allow payment of license fees for May-August 2021 in installments without penal interest, the Court, under Article 226, could not interfere with such policy decisions. Therefore, the Court found no merit in the petition warranting interference and dismissed it.

Key Issues

1. Whether the termination of the petitioner's license by the respondent No. 2, vide proceedings dated November 22, 2021, is illegal and violative of natural justice for not issuing a show-cause notice, as per Article 226 of the Constitution of India? 2. Whether the petitioner is liable to pay GST on the license fee, considering the terms of the license deed and the alleged non-demand of GST for three years? 3. Whether the petitioner is entitled to remission of license fees for the second lockdown period (May-June 2021) and the TSRTC employees' strike period (October-November 2019), and whether the respondent Corporation's refusal to grant such remission is arbitrary and violative of Articles 14 and 21 of the Constitution of India? Petitioner's arguments: The termination notice was issued without a show-cause notice, violating principles of natural justice. The license fee was inclusive of GST, and therefore, no additional GST was payable. The petitioner sought waiver of license fees for periods affected by the pandemic and the strike due to reduced revenue and business operations. Respondents' arguments: Clause 28(a) of the license deed allows termination for default in payment. Clause 6(a) and (e) of the license deed clearly state that the license fee is exclusive of GST, and the petitioner is liable to pay applicable GST. The Corporation had already taken a policy decision regarding remission for the lockdown period, allowing payment in installments without penal interest, and the petitioner was not entitled to further concessions.

Sections Cited

Section 28(a), Section 6(a), Section 6(e)

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Cause title — parties, addresses and appearances

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE EIGHTEENTH DAY OF APRIL TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE SRI JUSTICE A.ABHISHEK REDDY WRIT PETITION NOS: 35683 OF 2021 AND 5765 0F 2022 W.P.No.35683 ol 2021 Between: P. Kishore, Son of Narsaiah, Aged about 45 years, License Holder of Stall No.66 i.e.' Cloak Room in MGBS, Hyderabad. ...PETITIONER AND 1. Telangana State Road Transport Corporation, Represented by its tr/anaging Director, Bus Bhavan, fi/usheerabad, Hyderabad. 2. Senior Customer Relation Manager, Ranga Reddy Region, Telangana State Road Transport Corporation, IMahatma Gandhi Bus Station, Hyderabad. ..,RESPONDENTS Petition Under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ or order or direction, more particularly one in the nature of writ of Mandamus, declaring the action of the 2nd respondent in terminating the license of the petitioner without issuing show cause notice to the petitioner vide his Proceedings No.P4l122(77)l2O1B- RR dated 2211112021, issued against the petitioner, is highly arbitrary, unjust, violative of principles of natural justice, contrary to the terms and conditions of licenses, illegal and unsustainable' l.A.NO:1 OF 2021 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to suspend the operation of the Proceedings bearing No.P41122(77)/ 20'1 B-RR dated 2211112021 , issued against the petitioner, relating to termination of license of the petitioner in respect of his stall, pending disposal of the above writ petition. I.A.NO:2 OF 2022 Between: '1 . Telangana State Road Transport Corporation, Represented by its lVanaging Director, Bus Bhavan, Musheerabad, Hyderabad. 2. The Senior Customer Relation Manager, Ranga Reddy Region, Telangana State Road Transport Corporation, N4ahatma Gandhi Bus Station, Hyderabad ...,PETITIONERS/ RESPON DENTS/RES PON DENTS P. Kishore, Son of Narsaiah, Aged about 45 years, License Holder of Stall No.66 i.e., Cloak Room in MGBS, Hyderabad. ...RESPONDENT/PETITIONER/ WRIT PETITIONER Petition Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Cou( may be pleased to vacate the interim order granted on 2211212021 ln W.P.No. 35683 of 2021. Counsel for the Petitioner : SRI.C.RAMACHANDRA RAJU Counsel for the Respondents : SRI.N.VASUDEVA REDDY (SC FOR TSRTC) W.P.NO: 5765 OF 2022 Between: P. Kishore, Son of Narsaiah, Aged about 45 years, License Holder of Stall No.66 i.e., Cloak Room in MGBS, Hyderabad. ...PETITIONER AND 1. Telangana State Road Transport Corporation, Represented by its l\/anaging Director, Bus Bhavan, Musheerabad, Hyderabad. 2. Senior Customer Relation lt/anager, Ranga Reddy Region, Telangana State Road Transport Corporation, Mahatma Gandhi Bus Station, Hyderabad. ...RESPONDENTS Petition Under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be -, AND pleased to issue an appropriate writ, order or direction more particularly one in thenatureofWritofl\,4andamus,declaringtheactionoflstrespondentvideits proceedingsdated04.0g.202.lrefusingtograntremissionoflicenseefeesforthe period effected by the 2nd waive of the pandemic and refusing to waive of the licensefeesforthe2ndlockdownperiodforthemonthsofMayandJune'2021 and declaring the action of the 2nd respondent vide his Proceedings No P4l 122(77)1201!-RRdated3l'l2.2o2lissuedtothepetitionerasadvancenoticefor termination of license of the petiiloner and demanding the petitioner to pay the license fees for the strike period of TSRTC Employees for the months of october November-2019 and refusing to waive off the license fees for the 2nd lockdown period and demanding the petitioner to pay the full amount of license fees for the period effected by the 2nd wave of the pandemic and the action of the 2nd respondentinissuingonemonthadvancenoticeforterminationoflicenceofthe petitioner, without issuing any show cause notice to the petitioner to that effect is highly unwarranted, highly arbitrary' unfair' unjust' irrational' violative of principlesofnaturaljustice,unlawfulandviolativeofarticlesl4and2,lofthe constitution of rndia and consequenfly direct the respondents to wave of the licencefeeofthepetitionerforthestrikeperiodofTSRTCEmployeeforthe months of October November 2019 and the license fees of the 2nd lockdown period for the months of May and June 2021 and grant remission of license fees for the remaining months of the Covid effected period ' f rom the month of July' 2021 onwards till the pandemic ceases to exist proportionate to the decline in the revenue of the corPoration I 2 The Telanqana State Road Transport Corporation' Represented by its ffnagfis'Dj;;;6;'Brt-Bh';;n' Musneeiabad' Hvderabad The Reqional lt/anager, Ranga Reddy Region' Telangana State Road +iI"il;[#d"r]t13",'HrriItilu c#o r'i 6 us station' Hvderabad' ,...'PETITIONERS/ RESPONDENTS/RESPONDENTS -7 l.A.NO:2 OF 2022 Between: AND P. Kishore, Son of Narsaiah, Aged about 45 years, Llcense Holder of Stall No.66 i.e., Cloak Room in MGBS, Hyderabad. .....RESPONDENT/PETITIONER ...WRIT PETITIONER Petition Under Section '1 51 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to vacate the interim order granted on 02.02.2022 in lA No.1/2022 in WP No.576512O22. Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the operation of the Proceedings No.P4l 122(77)12018-RR dated 31 .12.2021 issued by the 2nd respondent against the petitioner in respect of his Stall No.66. in MGBS Hyderabad and consequentially directing the respondents not to insist petitioner to pay the full amount of existing licence fee stipulated in the license deed, till the corporation takes the decision to revise licence fee of the petitioner, commensuration with the Revenue of the Corporation during the pandemic period and further directing the respondents to collect the reasonable amount of licence fee from the petitioner @ 30% of the licence fee, pending disposal of the main writ petition. Counsel for the Petitioner : SRI.C.RAMACHANDRA RAJU Counsel for the Respondents : SRI.N.PRAVEEN REDDY (SC FOR TSRTC)

The Court made the following COMMON ORDER l.A.NO:1 OF 2022

THE HON'BLE SRI JUSTICE A,ABHISHEK REDDY WRIT PETITION Nos.35683 of 2O2l and 5765 of2022 COMMON ORDER: Since the petitioner in both the writ petitions is common and the issue involved in both the r,r,rit petitions is intrinsically connected, they are taken up toge ther and being disposed of by this common order. W.P. No.35683 of 2O2\ is filed questioning the Notice for Termination of Licence issued by the respondent No.2 uide proceedings No.P4l122(77)12O18-RR dated 22.11.2021, without issuing any show cause notice to the petitioner, whereas W.P.No.5765 of 2022 is filed questioning the proceedings dated 04.O9.2021 issued by the respondent Corporation relusing to grant remission of licence fee for the months of May and June, 2021, i.e. the period eflected by lockdown due to 2nd wave of Covid- 19 pandemic. W.P. No.35683 of 2O2l The case of the petitioner, in brief, is that he was granted licence by the respondent Corporation for running "Cloak Room" in Stall No.66 at MGBS, Hyderabad, for a period of llve years from 24.07.2019 to 23.01.2024 on payment of licence fee of Rs.40,2021- per month. While so, the respondent No.2 has issued the impugned notice dated 22.11.2021 calling it as one month advance notice, lor terminating the licence of the petitioner on the ground that he has not paid the GST on the licence fee from 24.0 1 .20 I 9 to November, 2021 . It is the specific case of the L \,r' P. Nos 35683 2A2l&,5765 2O2) petitioner that no show cause notice was issued to him before issuing the impugned notice dated 22.11.2021. It is further stated that the licence fee offered by the petitioner was inclusive of GST, and therefore, the question of the petitioner again paying any amount towards GST does not arise. Hence, the present writ petition. On 22.I2.2021, this Court, while issuing notice before admission has granted interim stay of eviction of the petitioner pursuant to the impugned notice dated 22.11.2021, subject to condition of his paying the GST. Seeking to vacate the said interim order, the respondent Corporation has filed I.A. No.2 of 2022 along rrvith a counter affidavit. In the counter affidavit I'iled by the respondent Corporation, it is mainly contended that as per Clause 28 (a) of the Deed ol License dated O5.O 1.2019, if the licensee defaults in payment of licence fee for three months consecutively or three times in a calendar year, the licence is liable for termination with one month advance notice. Further, as per Clause 42 of the Deed of Licence, in case business is not carried out by the licensee due to riots, agitations, bundhs, strikes, etc. the licensee shall have no right to claim any remission of licence fee payment or compensation or reimbursement of loss etc. Therefore, based on the above Clauses, the impugned notice was issued to the petitioner. It is further contended that the petitioner, instead of paying the GST amount, as per the interim order granted b1r this Court on 22.12.2021, has liled w.P. Nos.35683-202 l&5765-2022 W.P. No.5765 of 2022. Hence, it is prayed to vacate the interim order dated 22.12.2021 and also to dismiss the writ petition. The respondent Corporation has also filed an additional counter affidavit stating that as per condition No. 6(f) of the General Terms and conditions of the Tender Notification, the licensee shal1 pay the applicable GST along with licence fee at the rate lixed by Government from time to time. The petitioner, having signed on the terms and conditions of the tender, is bound to abide by the same. The allotment letter clearly indicates that the monthly licence fee of Rs.40,2 02 I - is excluding GST and other charges. lt is further stated that the petitioner was issued notice dated 12.\O.2O2l demanding payment of GST and when the petitioner failed to pay the same, thereafter only the impugned notice for termination of licence was issued' Areplyaffidavithasbeenfiledbythepetitionertotheadditional counter affidavit filed by the respondent Corporation mainly contending that the corporation having given the petitioner an option to submit the price bid inclusive of GST, in its own format of price bid as displayed in their website and having accepted the price bid of the petitioner which is inclusive of GST, has no right to demand the petitioner to pay additional amount towards GST. Further, the respondent Corporation has kept quiet for a long period of three years and thereafter started insisting the petitioner for payment ol GST, which cannot be countenanced' Hence, prayed to allow the Writ Petition. 3 /

L 4 Learned counsel appearing on behalf of the petitioner has stated that pursuant to the e-Tender Notification issued by the respondent corporation, the petitioner has participated in the tender process and licence was granted to him in respect ol stall No.66 (clock Room in MGBS) for a period of five years i.e., from 24.Ol.2olg to 23.0t.2024. Even though the petitioner has initially submitted the bid for an amounr of Rs.30,202/- inclusive of GST, after due negotiations, the licence fee was enhanced to Rs.40,2021- inclusive of GST. The learned counsel has stated that without issuing any shou, cause notice, the impugned notice for termination of licence has been issued by the respondent No.2 after a iapse of more than three years asking the petitioner to pay the GST amount from 24 .0 r .20 1 9 to November, 202 1 . The learned counsel has drawn the attention of this Court to the online tender form, which has the option of selecting the bid amount with GST (inclusive or exclusive). The very fact that the official respondents have issued the impugned notice after a lapse of more than three years substantiates the contention of the petitioner that the bid amount submitted by the petitioner is inclusive of GST and that no separate GST needs to be paid by the petitioner. Therefore, he has prayed this court to set aside the impugned notice for termination of licence and ailow the writ petition. Per contra, the learned Standing counser appearing on behalf of the respondent corporation has stated that as per the tender notification and also the Deed of Licence entered betneen the petitioner and the respondent Corporation, the licence fee was exclusive of GST. That the r- W.P. Nos 3s683-202 1&.rUSir)

W.P. Nos 35683 2A2l&5765-2022 petitioner having signed the Deed of Licence dated 05.01.2019, now cannot take U-turn and state that the licence fee is inclusive of GST. The learned Standing Counsel has further stated that when the tender notification and the Deed of Licence are in unequivocal terms that the licence fee is exclusive of GST, the petitioner cannot take advantage of the technical glitch in the software, and prayed this Court to dismiss the writ petition. Heard both sides and perused the record A perusal ol the record, more particularly, Clause 7 of the e-Tender Notification, dated 16.04.20 18, shows that the basic price that should be quoted by any participating tenderer/bidder should be excluding GST. Clauses 7 and 13 of the e-Tender Notification read as under:

Tenderer shall submit Pice Bid online onlg. The bqsic pice shouLd be exctuding GST and other toxes applicable, if ang.

13.

The successf.rl tenderer (allottee) shall pay the GST as appltcable from time ta time (at present the GST is 18o/o CGST-9o/o + SGST-go/o) on paAment of monthlg ticence fee (qtoted bg the licensee) euery month." Even a perusal ol the General Terms and Conditions of the tender document submitted by the petitioner shows that the licence fee shall be exclusive of GST and other charges, if any. Clauses 6 (i) and 13 (c) of the General Terms and Conditions read 5 / as under L ,1/\ Jt. J i| I, \os.35681 2021&5765 2022. "6 (fl The licensee stn pag the applicable GST along with the License fee at the rate as fixed bg the Cout. from ttme to time. Ang delag in paAment of GST utitL lead to interest and penaltg as applicable. 13(t:) Amount quoted by the tend.erer (bastc pice) touards monthlg license fee shall be exclusiue of eLecticity, mointenance, tuater chorges, GST and others tf any., Furthermore, the Allotment order dated 24.12.2org arso shows that the licence fee is exclusive of GST and other charges. The said Alotment Order reads as under: "In compliance with the orders of Hon,ble High Court uide rekrence 3,a cited and_ guidelines issued. uid.e reference 2d cited, the competent authoritg has accorded approual for allotment of Statt No.66 at IttGBS to the petitioner Si p. Kioshore, pend.ing d"isposal of Wit Petttion No.23883/ j8, for runntng business of "CLOAK ROOM" on a monthly licence fee offered bg gou Rs.40,202/ _ (Rupees Forty thousand ttuo hundred two onlg) for the first 2 gears, with an enhancement of the license fee bg 5% in 3d year, 1096 in 4th Aear and 15ok in Stn gear, ouer the licence fee pagable tn 2nd, 3d and 4th gears respectiuely, exclud.inq GS?. Electricity, Maintenance and. Water Cha.rges etc., for a peiod of fue (5 gears) onlg.,, (Emphasis suppliedl. Even though the petitioner has relied on the e_tender form submitted by him, as submitted by the learned counsel for the corporation, the same appears to be a technical glitch in the software. The petitioner, having accepted the terms and conditions oI the tender and having entered into Deed of Licence, now cannot turn around and try to take advantage of the technical error in the software. 6 r w.P. Nos.35683_202 1&5765_2022 A perusal of the Deed of Licence dated 05.01.2019 entered between the petitioner and the respondent Corporation, more particularly, Clause 6 (a) and (e) thereof clearly discloses that the licence fee is exclusive of GST and other charges. Clause 6 (a) and (e) of the Deed of Licence reads as under: "6, LICENCE FEE: a) The licence fee ts Rs.40,202/ - (Rupees Fortg thousand two hundred two onLy in uords) per month exclusive of electicity & water charges, maintenance charges, GST etc., and the same shaLl be paid in aduance on or before lAh daA of current month. e) The Licensee sL'talt pay applicable GST at the rate as frxed bg the Gout. from time to time on the license fee pagable to the Corporation, aparT from pagment of license fee as agreed to be paid to the Corporation. Any delag tn pagment of GST tuilt lead to interest and penaLtg as applicable." This Court, in W.P.Nos.31454 of 20 I 1 and batdn, uide common order dated 09.04.2018, while relying on the judgment of the Hon'ble Supreme Court in Joshi Technologies Internatlonal Inc, a. unlon of Ind.lal, has dismissed the writ petitions. However, this Court, with a view to ameliorate the hardship to some extent, has granted the following relief: "The petitioners, if pag tlle licence fee in three instalments, the respondent Corporation is directed not to consider collecting interest from the petitioners, for delaged paAment. In default of the pagment, the respondent Corporation is free to recouer licence fee in accordance uith lau.t. " 7 ' (20r5) 7 scc 728

L B In the instant case, even though this Court, on 22.12.2021, has granted interim stay of eviction of the petitioner subject to condition of liis paying the GST, it is brought to the notice of this court that the petitioner has not paid rhe GST till date and the order of this Court, dated 22.12.2021, is not yet complied. Having regard to the fact that the petitioner himself has signed the Deed of Licence dated 05.01.2019, the contention of the learned counsel for the petitioner that the impugned order passed by the respondent Corporation deminding the petitioner to pay GST amount from 24.O1 .2019 to November, 2O2I @ l,ok per month is illegal and untenable, cannot be accepted. Merely because the respondent corporation has not demanded the payment of GST for a period of three years cannot absolve the petitioner from paying the GST, since as per the terms and conditions of the Tender Notification, Allotment order and the Deed of Licence clearll, discloses that the licence fee is exclusive of GST. Therefore, the petitioner cannot take advantage of the lapses committed by the respondent Corporation and refuse to pay the GST. For the aforestated reasons, and in view of the common order dated 09.04.2018' passed in w.P.No.314s4 of 2o11 and batch, the petitioner is directed to pay the GST amount and also other dues, as stipulated in the impugned Notice for Termination of Licence dated 22.11.2021, within a period of one month from the date of receipt of a copy of this order, failing which, the impugned notice for termination of licence stands good. \ A,\ R i \. !\J P. \os.35683 :02]&5zOS :oI; 'r I

I W.P. Nos.35683_202t&S75s 2022 With the above directions, W.p.No.35 6g3 of 2O2I is disposed of. Miscellaneous petitions pending in this writ petition, if any, shall stand closed. There shall be no order as to costs. W.P.No.5765 ot 2O2Z The case of the petitioner, in brief, is that the respondent corporation is demanding the petitioner to pay the ricence fee for the 2nd lockdown period of May, 2o2t, and June, 2021, without considering the fact that the corporation itserf has suffered huge loss due to rockdown and also the volume of commuters at MGBS, Hyderabad, has decreased drastically. This Court on O2.O2.2O22 has granted interim suspension of the proceedings dated 31.l2.2O2I issued by respondent No.2 subject to payment ol 50% of the demanded amount. Seeking to vacate the said interim order, the respondent corporation iras filed I.A. No.2 of 2022 along with a counter affidavit mainly stating that the respondcnr corporation has considered the representations of arl the ricense horders with regard to waiver of ricense fee for the months of May, 2O2l to August, 2021, and issued proceedings dated 04.09.202 1 permitting aI the licensees to pay the ricense fee for the months of May, 2O2l to August, 2027, in four equal installments i.e. from October, 2O2l to January, 2022, withowt penal interest. Except the / \

L \{' P. Nos.35683-2021&5?65 2022\ above, the petitioner is not entitled for any other concessions and 10 To s.A therefore prayecl to dismiss the Writ petition. Having regard to the fact that the with regard to waiver of iicence fee for the months of May, 2A21 b August, 2021, the respondent Corporation has already taken a policy decision and permitted all the licensees to pay the licence fee for the said period in four equal instarlments i.e. from October, 2027 to January, 2022, wtthout penal interest, this Court, under Article 226 of the constitution of India, cannot sit over the poricy decisions taken by the authorities concerned. Furthermore, in view of the order passed by this Court in W.p.No.356g3 of 2O2t, this Court does not find any merit in the present writ petition u,arranting anv interference. W.P.No.5765 of 2022 is, accordingly, dismissed. Miscellaneous petitions pending in this writ petition, il any, shall stand closed. There shall be no order as to costs. . P.PADMANABHA REDDY ASSISTANT REGISTRAR //' SECTI ER '1 . One CC to SRI.C.RAMACHANDRA RAJU, Advocate IOPUC]

One CC to SRI.N.PRAVEEN REDDY (SC FOR TSRTC) [OPUC]

One CC to SRI.N.VASUDEVA REDDY (SC FOR TSRTC) (OPUC)

Two CD Copies

One spare copy q \

HIGH COURT DATED:1 810412022 COMMON ORDER I L) 1 1 JUN 2[?1 c1 ,D 1 g 5T4-16. c + o ,{-\ WP.Nos.35683 OF 2021 AND 5765 ot 2022 D!SMISSING THE WRIT PETITIONS WITHOUT COSTS @w'$ { ,)-

Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.