Tamilselvam vs. The Commissioner Of Municipal Administration

Facts

The petitioner, Tamilselvam, filed a writ petition seeking a Mandamus to direct the respondents, the Commissioner of Municipal Administration and the Executive Officer of Thirupathur Town Panchayat, to refund or adjust GST paid for the years 2016-2017, 2017-2018, 2018-2019, and 2019-2020, collected for market fees. The petitioner contended that market fees are exempted from GST based on Notification No. 25/2012 and a subsequent circular. The respondents argued that the petitioner was liable to pay GST as per an audit objection, which stated that service tax should be collected when the annual rent/lease amount exceeded Rs. 10,00,000, a threshold allegedly crossed by the Thirupathur Town Panchayat from 2007-2008. They also claimed there was no provision for refund or adjustment of GST.

Held

The Court acknowledged that the issue of whether market fees are exempted from GST was pending adjudication. Considering this, the Court disposed of the writ petition with a specific direction. If the adjudication process concludes in favour of the petitioner, meaning the market fee is indeed exempted from GST, then the amount collected by the respondents should be adjusted towards future payments by the petitioner. The Court also directed the respondents to consider and dispose of the petitioner's representation within one month from the date of receiving a copy of the order, in light of Notification No. 25/2012 and Circular No. 13052/2016/D2. No order as to costs was made. The Court did not expressly leave any issue undecided, but the final determination of exemption was deferred to the ongoing adjudication.

Key Issues

1. Whether the market fee collected by the Thirupathur Town Panchayat is exempted from GST under Notification No. 25/2012, as amended by Circular No. 13052/2016/D2 dated 03.05.2017, thereby entitling the petitioner to a refund or adjustment of the GST paid for the years 2016-2017 to 2019-2020? (Question of law) Petitioner's Contentions: The petitioner argued that Notification No. 25/2012, specifically entry 39, and the subsequent circular clearly exempted services by a local authority by way of market fee from service tax (and by extension, GST). Therefore, the amounts collected should be refunded or adjusted. Respondents' Contentions: The respondents contended that an audit objection raised by the Assistant Director of Local Fund Audit indicated that service tax was collectible when the annual rent/lease amount exceeded Rs. 10,00,000, which had been the case for Thirupathur Town Panchayat since 2007-2008. They further argued that there is no rule or provision for refunding or adjusting GST, and that the issue of exemption was pending adjudication.