2025 (5) TMI 724 - HC - GST

GST Dispute: Coaching Services Provider Wins Temporary Relief with 8-Week Decision Window on Rs. 18.5 Crore Claim

Sai Speed Medical Institute Pvt. Ltd., Rep. by its Founder and Managing Director, Dr. K. Vinayak Senthil Versus The State of Tamil Nadu, The Principal Secretary, The Joint Commissioner of CGST and Central Excise, O/o the Principal Commissioner of CGST and Central Excise, The Joint Commissioner of State Tax, O/o the Joint Commissioner of State Tax, Chennai

Sai Speed Medical Institute Pvt. Ltd., Rep. by its Founder and Managing Director, Dr. K. Vinayak Senthil Versus The State of Tamil Nadu, The Principal ... 1. ISSUES PRESENTED and CONSIDERED- Whether the petitioner's representation dated 05.02.2025 regarding the disputed G.S.T. claim of the respondents Nos.3 and 4 should be considered and decided on merits within a stipulated time frame;- Whether the petitioner is entitled to recover the sum of Rs. 18,54,81,197/- allegedly due from the second respondent Department of School Education for coaching Government School students for NEET preparation;- The validity and implications of the tax liability and penalty imposed by the third respondent (Joint Commissioner of Central GST and Central Excise) amounting to Rs. 2,82,93,742/- plus 100% penalty, especially in light of the School Education Department's contention that the petitioner provided services free of cost;- The procedural and substantive rights of the petitioner in the context of prior judicial decisions, including the dismissal of earlier writ petitions and appeals, and the scope of recourse available to the petitioner;- The extent to which the tax authorities can proceed coercively in the matter pending the decision of the second respondent on the petitioner's dues;2. ISSUE-WISE DETAILED ANALYSISIssue 1: Consideration of Petitioner's Representation on G.S.T. ClaimRelevant legal framework and precedents: The petitioner's right to have its representation considered arises from principles of administrative law mandating fair and timely consideration of representations. The Court relied on its earlier judgment dated 01.08.2022 in W.A.Nos.263 and 108 of 2022, where the petitioner was granted liberty to approach the Government for settlement of dues and, if not resolved, to seek remedy through Civil Court.Court's interpretation and reasoning: The Court emphasized that the second respondent (Department of School Education) must consider the petitioner's representation dated 05.02.2025 and pass orders in accordance with law within eight weeks of receipt of the Court's order. This direction enforces procedural fairness and expedites resolution.Key evidence and findings: The petitioner submitted that it had undertaken coaching services upon request of the Department of School Education, with an accepted amount due of Rs. 18,54,81,197/-. The Department has not responded to the representation.Application of law to facts: The Court applied the principle that administrative authorities must act on pending representations within a reasonable time. It also reaffirmed the petitioner's right to pursue civil remedies if the Government refuses payment.Treatment of competing arguments: The Department's silence was noted, and the Court did not accept any justification for delay, directing expeditious disposal. The petitioner's prior undertaking to withdraw writ petitions and appeals to seek settlement was respected.Conclusions: The second respondent is mandated to decide on the representation within eight weeks, failing which the petitioner's grievance remains unresolved and civil remedies become available.Issue 2: Entitlement to Payment of Rs. 18,54,81,197/- for Coaching ServicesRelevant legal framework and precedents: Contractual obligations and Governmental liability principles govern entitlement to payment. The earlier Division Bench judgment allowed the petitioner to seek Government settlement or civil suit, indicating no immediate judicial determination of entitlement.Court's interpretation and reasoning: The Court did not adjudicate the substantive claim but recognized the contractual background and the petitioner's claim of accepted dues. It deferred substantive determination to the Government's decision or civil courts.Key evidence and findings: The petitioner's claim is based on coaching services rendered at the Department's request, with an accepted contract value. The Department disputes payment, asserting the exercise was free of cost.Application of law to facts: The Court's approach respects separation of powers and procedural propriety, leaving the factual and contractual disputes to be resolved by the Government or civil litigation.Treatment of competing arguments: The Department's contention of free-of-cost services contrasts with the petitioner's claim of accepted dues. The Court refrained from resolving this conflict at this stage.Conclusions: The petitioner's entitlement remains subject to Government decision or civil suit; no immediate payment order is issued.Issue 3: Validity of Tax Liability and Penalty Imposed by the Third RespondentRelevant legal framework and precedents: The Central Goods and Services Tax Act and related procedural norms govern imposition of tax and penalties. Tax liability is generally based on invoice issuance and payment liability.Court's interpretation and reasoning: The Court noted that the third respondent's tax demand and penalty are disputed by the Department of School Education, which claims the petitioner's services were free of cost. The Court observed that normally tax authorities act on invoices raised by the petitioner but here the ultimate liability lies with the Government Department, which has not yet decided the payment issue.Key evidence and findings: The third respondent imposed a tax liability of Rs. 2,82,93,742/- plus 100% penalty on 17.01.2025, based on the contract value. The Department disputes the tax demand, asserting no payment liability.Application of law to facts: The Court directed that the third respondent shall not take any coercive steps until the second respondent decides on the petitioner's representation. This safeguards the petitioner from premature enforcement actions.Treatment of competing arguments: The Court balanced the tax authority's statutory powers with the need to avoid prejudice to the petitioner pending Government decision. It preserved the petitioner's right to challenge the tax order subsequently.Conclusions: Coercive tax enforcement is stayed pending Government decision; petitioner may challenge tax orders after such decision.Issue 4: Procedural Rights and Remedies for the PetitionerRelevant legal framework and precedents: The Court's earlier judgment granted liberty to the petitioner to withdraw writ proceedings and seek Government settlement or civil remedies. Principles of natural justice and administrative law support such procedural rights.Court's interpretation and reasoning: The Court reiterated that the petitioner's grievance is to be resolved by the Government or through civil suit if refused. The petitioner's undertaking to withdraw writ petitions was honored, and the Court emphasized procedural pathways available.Key evidence and findings: The petitioner had earlier withdrawn writ petitions and appeals with liberty to approach the Government and civil courts.Application of law to facts: The Court enforced the procedural framework established in prior rulings, ensuring orderly resolution of disputes.Treatment of competing arguments: The Court did not entertain further writ remedies but preserved civil remedies and the right to challenge tax orders.Conclusions: The petitioner must pursue Government settlement or civil suit; no further writ relief is granted.Issue 5: Stay on Coercive Action by Tax Authorities Pending Government DecisionRelevant legal framework and precedents: Tax authorities possess statutory powers to enforce tax demands, but courts may grant interim relief to prevent irreparable harm pending final adjudication.Court's interpretation and reasoning: The Court held that the third respondent shall refrain from coercive steps until the second respondent decides on the representation. This interim relief protects the petitioner from enforcement actions in a disputed matter.