M/S Venkateshwara Cleaning Sweeping And Sanitation Maintenance Society vs. The State Of Telangana

Held

The Court held that the respondent-Corporation's position that the petitioner is liable to pay GST under the contract is misplaced. Clause (47) of the contract, which the respondent relied upon, clearly states that the contractor has to comply with provisions relating to labour laws and indemnify the Corporation for claims and damages under such laws. The Court observed that GST is not a law relating to labour. Therefore, prima facie, the respondent-Corporation is unjustified in claiming that the petitioner needs to pay GST under this clause. Consequently, the learned Single Judge should have granted a limited stay on the GST demand. The Court modified the order of the learned Single Judge by staying the demand of Rs.3,47,209/- towards GST. The writ appeal was disposed of with this modification.

Facts

The appellant challenged an order from a learned Single Judge who declined to grant an interim stay in a writ petition. The writ petition itself challenged a letter from the respondent-Corporation demanding Rs.10,20,181/- as outstanding dues. A significant portion of this demand, Rs.3,47,209/-, was attributed to Goods and Services Tax (GST) at 18% per annum. The petitioner argued that the contract between the parties did not stipulate any obligation to pay GST, making its imposition illegal. The petitioner also contended that if the GST amount were recovered before the writ petition was decided, the petition would become academic. The respondent-Corporation argued that the petitioner was liable to indemnify the Corporation for all claims and damages under labour laws, justifying the GST demand.

Key Issues

1. Whether the respondent-Corporation is justified in demanding GST from the petitioner under the terms of the contract, specifically in light of Clause (47) of the contract, which pertains to labour laws. Petitioner's contentions: The petitioner argued that the contract lacked any stipulation requiring them to pay GST. Therefore, the respondent-Corporation's demand of Rs.3,47,209/- as GST was unjustified. They further contended that failure to grant an interim stay would render the writ petition infructuous if the GST amount was recovered. Respondent's contentions: The respondent-Corporation argued that under the contract, the petitioner was liable to indemnify the Corporation for all claims and damages suffered under labour laws, and this liability extended to the GST demand.