Y. Jeyasingh vs. The Commissioner Of Municipal Administration

Facts

The petitioner, a contractor, filed a writ petition seeking the return of a security deposit of Rs. 32,42,400/- paid to the Nagercoil Municipality for contract works. The petitioner contended that all contract works were concluded and the deposit should be refunded. The Municipality, however, withheld the deposit, citing objections raised by the Audit Department due to the petitioner's alleged non-clearance of service tax/GST dues. The petitioner claimed to have cleared all such dues.

Held

The Court noted that the controversy was narrow. If the petitioner indeed cleared all GST/service tax dues, they were directed to obtain a 'No Due Certificate' from the concerned authority and submit it to the third respondent (Nagercoil Municipality). Upon verification of the certificate's genuineness and confirmation of cleared dues, the Municipality was ordered to return the security deposit immediately and without delay. The petitioner's counsel agreed to obtain and submit the certificate. The Municipality was directed to complete this verification process within six weeks from the date of receiving the certificate. The Court disposed of the writ petition with these terms.

Key Issues

1. Whether the Nagercoil Municipality is justified in withholding the petitioner's security deposit on account of alleged pending service tax/GST dues, when the petitioner claims to have cleared them? The petitioner argued that the Municipality cannot retain the security deposit if all service tax/GST dues have been paid. The petitioner stated they would obtain a 'No Due Certificate' from the concerned authority to prove clearance of dues. The respondents (Municipality) argued that the Audit Department had raised objections regarding pending service tax/GST dues, necessitating the withholding of the security deposit.