GST exemption for human hair auctions overrides tender condition demanding tax from bidders under the impugned clause

A tender condition requiring 18% GST on auction of human hair was inconsistent with the applicable exemption, because the Central Government notification exempted human hair, unworked whether or not washed, including waste of human hair. The HR&CE circular also stated that no GST was payable on such auctions. Accordingly, clause 23 of the tender could not be enforced to compel auction participants to pay GST, and the condition was set aside to that extent.

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Issues: Whether the tender condition requiring payment of 18% GST on the auction of human hair could be sustained when the Central Government notification and the HR&CE circular indicated that no GST was payable on such collection.

Analysis: The auction related to collection of human hair, and the material placed before the Court showed that the relevant Central Government notification granted exemption from GST for human hair, unworked whether or not washed, including waste of human hair. The HR&CE circular also stated that no GST was payable for auctions pertaining to collection of human hair. In that backdrop, insisting on 18% GST through clause 23 of the tender condition was inconsistent with the applicable exemption position.

Conclusion: Clause 23 of the tender notification, insofar as it mandated payment of 18% GST, was interfered with, and the participants in the auction were held not liable to be insisted upon to pay such GST.

Final Conclusion: The writ petition succeeded to the extent of the GST condition in the tender, and the impugned clause was set aside in effect.

Ratio Decidendi: Where a tender condition imposes GST contrary to an applicable exemption for the subject goods or activity, the condition cannot be enforced.

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