GST - Nebulous state of affairs - Court fully justified in initiating action for contempt, however, considering sensitivity of matter, is inclined to give one more opportunity to respondent to consider representations and pass orders: HC
By TIOL News Service
CHENNAI, DEC 15, 2017: THE petitioner is an association registered under the provisions of the Tamil Nadu Societies Registration Act, 1975. The Association was formed for the Welfare of the members of the Road Contractors who have been carrying on works for the National Highways and Highways Department and other Governmental Organisation. The contractors used to remit 2% tax on value for the works executed by them towards the Works Contract Tax under the Tamil Nadu Value Added Tax, 2006.
Pursuant to the Central Goods and Services Tax Act, 2017 with effect from 01.07.2017 certain issues have arisenwhich compelled the petitioner to submit representations to the respondents.
The petitioner stated that on 22.08.2017, the Central Government issued notification notifying that 6% of the tax is leviable by the Central Government towards works contract. The State Government is empowered to levy towards contract tax in addition to the works contract tax imposed by the Central Government. In sum, the contractor would be liable to pay 12% of tax towards the works contract.
Therefore, the petitioner/Association made representations to the respondents stating that the contract works for which the agreements were executed prior to 01.07.2017, GST cannot be imposed and 2% VAT alone is applicable.
Alternatively, the petitioner/Association stated that if the petitioners are compelled to pay anything over and above 2%, the respondents, in addition to the value of the work done, has to remit the GST as per the notification, since the representations submitted by the petitioner/Association have not been considered and no orders were passed.
When the case came up for hearing before the Madras High Court, the petitioner was directed to implead the Secretary to Government, Commercial Taxes Department and the Commissioner of Commercial Taxes.
The Government Advocate [Taxes] accepted the notices for the newly impleaded respondents and it appeared that he had personally spoken to the Commissioner of Commercial Taxes, from which, it is seen that the Government also is in the process of discussing as to how the modality has to be worked out and what is the relief petitioner/Association is entitled to. A copy of the Government Order in G.O.Ms.No.264, Finance (Salaries) Department, dated 15.09.2017, wherein the Government issued certain guidelines in matters pertaining to the bills presented by contractors was also placed before the Court.
The High Court, therefore, observed that since the petitioner's representations were pending, it would be appropriate for the Commissioner of Commercial Taxes to give a reply.
Accordingly, a direction was issued to the Commissioner of Commercial Taxes to consider the representations given by the petitioner/Association and pass orders on merits and in accordance with law, within a period of four weeks after according an opportunity of personal hearing to the petitioner/Association.
The Writ Petition was disposed of.
We reported this order dated 10.10.2017 as 2017-TIOL-2897-HC-MAD-GST.
It seems the directions were not followed and, therefore, the petitioner Association has filed Contempt petition against the Commissioner of Commercial Taxes.
The Special Government Pleader, who accepted notice on behalf of the respondent/contemnor contendedbefore the High Court that the respondent had absolutely nothing to do in the matter and it is for the Central Government to have a say in the matter.
The High Court, therefore, observed -
“7. If according to the Commissioner, he had nothing to do the matter, nothing prevented him to contend so. In fact, that was an observation made by the Court in more than two places in the order. Though the Court would be fully justified in initiating action for contempt, considering the sensitivity of the matter and the members of the petitioner/Association, who are contractors, are put to hardship on account of the nebulous state of affairs, this Court is inclined to give one more opportunity to the respondent to consider the representations given by the petitioner/Association and pass orders on merits and in accordance with law as ordered in the writ petitions within a period of two weeks from the date of receipt of a copy of this order. It is made clear that before orders are passed, the authorised representative of the petitioner/Association be heard in person by the Commissioner.”
The contempt petitions were disposed of.
(See 2017-TIOL-2914-HC-MAD-GST)
