Smt. B. Padmavathi vs. The Tsrtc

Held

The Court held that the petitioners were liable to succeed. It reasoned that the parties are governed by the covenants of the written agreement, the Deed of License. The Court found that Clause 52 of the Deed of License clearly stipulated that the Corporation would bear the service tax if any was applicable on the renting of immovable properties. The Court rejected the respondents' argument that GST was a new levy not covered by Clause 52. It noted that GST was introduced subsequent to the constitutional amendment and replaced service tax and VAT. The Court concluded that the respondents' claim that GST was a new levy making the petitioners liable to pay it in addition to the license fee was not justified. Consequently, the impugned Demand Notices, in the form of GST Model Invoices, were set aside. The Court allowed all the writ petitions.

Facts

The petitioners, who were granted licenses by the Telangana State Road Transport Corporation (TSRTC) to run businesses from TSRTC premises, challenged the levy of Goods and Services Tax (GST) on the license fee. The petitioners argued that the Deed of License, specifically Clause 52, stipulated that any service tax applicable on the renting of immovable property would be borne by the Corporation. They contended that GST, being a successor to service tax, should also be borne by TSRTC. The respondents, TSRTC, argued that Clause 46 and 50 of the Deed of License made the licensee liable for all incidental charges, taxes, and other charges levied by statutory authorities. They further contended that GST was a new levy introduced after the agreement and was not covered by Clause 52.

Key Issues

1. Whether the Goods and Services Tax (GST) levied on the license fee payable by the petitioners for the use of premises is in violation of the terms of the Deed of License, specifically Clause 52, which states that the Corporation shall bear any applicable service tax on the renting of immovable property? (Question of law) Petitioner's Arguments: The petitioners contended that the Deed of License, particularly Clause 52, explicitly stated that the Corporation would bear any service tax applicable on the renting of immovable property. They argued that since GST replaced the erstwhile service tax, the liability to pay GST should fall on the Corporation, as per the agreement. They relied on the Deed of License itself. Respondents' Arguments: The respondents (TSRTC) argued that Clause 46 and 50 of the Deed of License made the licensee liable for all incidental charges, taxes, and other charges levied by statutory authorities. They further contended that GST was a new levy introduced after the agreement was executed and was therefore not covered by Clause 52. They relied on Clauses 46 and 50 of the Deed of License.