V. Annadurai vs. The Secretary TO Govt.

Held

The Court noted the submissions made by the learned Government Advocate for the respondents. The respondents had presented a circular dated August 1, 2017, from the Principal Secretary, Highways and Minor Ports Department, mandating the deduction of 1% CGST and 1% SGST for work contracts exceeding ₹2,50,000. They also referred to a communication from the Chief Engineer, Highways (C&M), dated October 4, 2018, reiterating this instruction. Additionally, the respondents cited a CBEC Circular dated September 14, 2018, which indicated that tax deduction at source provisions were notified to be effective from October 1, 2018. In light of the counter affidavit filed by the respondents and the circulars presented, the Court found no further adjudication necessary. Consequently, the Writ Petition was closed. No costs were awarded.

Facts

The petitioner, V. Annadurai, filed a writ petition seeking to quash an order dated June 11, 2020, passed by the Divisional Engineer, Highways Department (C&M), Sivagangai (5th respondent). The petitioner also sought a direction to convert the Goods and Services Tax (GST) deducted to Value Added Tax (VAT) for work completed in 2011. The respondents, represented by the Government Advocate, contended that the deduction of 1% CGST and 1% SGST was in accordance with a circular dated August 1, 2017, issued by the Principal Secretary, Highways and Minor Ports Department, for work contracts exceeding ₹2,50,000. They also cited a communication from the Chief Engineer, Highways (C&M), dated October 4, 2018, reinforcing this deduction. The respondents further referred to a CBEC Circular dated September 14, 2018, which clarified that tax deduction at source provisions were notified to come into force from October 1, 2018.

Key Issues

1. Whether the deduction of GST from the payment for work completed in 2011, prior to the notification of GST and its related tax deduction at source provisions, is legally sustainable? (Question of law) Petitioner's Argument: The petitioner sought to convert the GST deduction to VAT, implying the original deduction was incorrect for work done in 2011. The petitioner's counsel ultimately requested the writ petition be closed based on the respondents' submissions. Respondents' Argument: The respondents argued that the deduction of 1% CGST and 1% SGST was lawful, citing a Highways Department circular dated August 1, 2017, and a subsequent communication from the Chief Engineer dated October 4, 2018. They also referred to a CBEC Circular dated September 14, 2018, which stated that tax deduction at source provisions were notified to come into force from October 1, 2018. The respondents maintained that the GST deduction was a legal and bona fide action.