Naresh Women Hair Enterprises vs. The State Of Telangana

Facts

The petitioner, Naresh Women Hair Enterprises, participated in an auction conducted by Sri Anjaneya Swamy Vari Devasthanam (respondent No. 3) for the disposal of human hair collected at the temple premises for the period August 1, 2021, to February 28, 2022. The auction was finalized on July 28, 2021, with the petitioner being the highest bidder at Rs. 1,40,20,200. A tender condition (No. 25) stipulated that the successful bidder was required to pay 18% GST. The petitioner commenced collection on August 1, 2021. In July 2022, just before the contract expiry, the petitioner objected to paying 18% GST, citing Notification No. 2/2017-Central Tax (Rate) dated June 28, 2017, which allegedly exempts human hair. The petitioner sought a writ of mandamus to declare the demand illegal and direct the handing over of collected hair.

Held

The Court held that the writ petition was not maintainable. It found sufficient force in the arguments of the respondent-Department regarding the maintainability. The Court noted that the petitioner participated in the tender process with full knowledge of tender condition No. 25, which clearly stipulated the liability to pay 18% GST. The petitioner quoted his price, was declared successful, and collected human hair for over eleven months without objecting to the GST payment clause. It was only when the tender period was nearing its end that the petitioner raised an objection. The Court emphasized that having accepted the tender conditions and acted upon them, the petitioner could not turn around at a belated stage to question the payment of GST or other tender conditions. Furthermore, the Court observed that respondent No. 3, in its counter, did not dispute the levy of GST and stated that there was no outright sale, but rather a right to collect human hair was offered, which the petitioner accepted. This indicated that the petitioner was providing services to the Devasthanam for collecting hair, not engaging in a sale of goods. Consequently, the Court found no merits in the writ petition.

Key Issues

1. Whether the writ petition is maintainable under Article 226 of the Constitution of India, considering the contractual nature of the dispute and the petitioner's prior participation in the tender process with full knowledge of the GST payment clause. 2. Whether the collection of human hair by the petitioner from the temple premises constitutes a supply of goods or services that is exempt from GST under Notification No. 2/2017-Central Tax (Rate). Petitioner's arguments: The petitioner contended that the collection of human hair amounts to an outright sale and is exempt from GST as per item No. 0501 at Sl. No. 30 of the Schedule in Notification No. 2/2017-Central Tax (Rate). They argued the action of respondent No. 3 in insisting on GST payment was illegal, arbitrary, unconstitutional, and contrary to the guidelines framed by respondent No. 4. Revenue/State's arguments: The respondents argued that the writ petition is not maintainable because it involves a pure contractual dispute. They asserted that the petitioner was aware of the 18% GST clause in the tender conditions, participated with open eyes, and cannot now question it. They further argued that since the GST payment was a contractual condition, contractual disputes cannot be challenged in writ jurisdiction.