Tax Demand Stayed for Four Weeks While Contractor Must Pay Outstanding GST on Government Project

The HC disposed of a writ petition challenging a show cause notice for short paid tax under CGST and SGST with penalty and interest. The petitioner argued that respondent authorities had not paid bills for completed works under the Neeru Chettu Programme, questioning the legality of tax demands. The court directed the petitioner to pay the outstanding amount within four weeks, during which no coercive action would be taken. The court clarified that the petitioner's claim for payment for completed works was not addressed in this petition and could be pursued in an appropriate forum.

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Issues:
Petitioner seeking relief through a writ petition challenging a show cause notice for payment of short paid tax under CGST and SGST along with penalty and interest. Argument raised regarding unpaid bills under Neeru Chettu Programme and coercive action for tax liability. Court considering payment within four weeks to serve the interest of justice. Clarification provided regarding authorities' liability to pay the petitioner for completed works.

Analysis:
The petitioner approached the Court seeking relief through a writ petition challenging a show cause notice issued by the 3rd respondent, directing the petitioner to pay short paid tax under CGST and SGST along with penalty and interest. The petitioner argued that respondents 5 to 7 did not pay the bills payable under the Neeru Chettu Programme, questioning the legality, arbitrariness, and unconstitutionality of the demand. The petitioner requested the Court to prevent the respondents from insisting on payment until the finalized amounts, including GST, were released from respondents 4 to 7. The petitioner also sought direction for respondents 4 to 7 to pay the remaining sum for the execution of specific works. The Court considered the arguments raised by the petitioner, emphasizing the need for justice in the matter.

The Court noted that the petitioner had advanced arguments challenging the actions of the authorities, highlighting the discrepancy between unpaid bills and the tax liability imposed. The petitioner agreed to pay the demanded amount within four weeks from the hearing date to avoid coercive action. The Court, after considering the submissions, decided that if the petitioner paid the amount within the specified time frame, it would serve the interest of justice. As a result, the Court disposed of the writ petition with a direction for the petitioner to pay the entire outstanding balance amount due as per the impugned notice within four weeks, with no coercive action to be taken during this period.

Regarding the authorities' liability to pay the petitioner for completed works, the Court clarified that this aspect was not addressed in the current petition and could be decided if the petitioner approached the appropriate forum. The Court left the decision on costs open and allowed the petitioner to seek remedies for the remaining dues with the concerned authorities for the completed works through the appropriate forum. The Court concluded by disposing of any pending miscellaneous petitions related to the case.

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