Facts of the Case

The petitioner, M/s Manpower Servicing Agencies, Guntur, represented by its Managing Director, supplied Data Entry Operators on an outsourcing basis to the Gudivada Municipality (the fifth respondent). It filed a writ petition under Article 226 questioning the action of the respondents in not paying the GST/service tax difference amount of Rs. 5,82,204, Rs. 2,80,890 and Rs. 3,76,812 — totalling Rs. 12,39,906 — for the periods 01.11.2011 to 31.08.2016, 01.09.2016 to 30.06.2017 and 01.07.2017 to 30.06.2020 respectively, along with a GST difference amount of Rs. 3,35,293, together with interest at 24% and penalty. The petitioner contended that its objections and representation dated 07.08.2024 had not been considered, and that the inaction was arbitrary and violative of the principles of natural justice.

Issues Involved

  1. Whether the respondents’ failure to pay the claimed GST/service tax difference amount for the contractual period was arbitrary and contrary to law.
  2. Whether the petitioner’s representation dated 07.08.2024 was liable to be considered and disposed of.
  3. Whether the claim could be sustained in the absence of remittance certificates evidencing payment of GST.

Petitioner’s Arguments

  • The respondents had failed to pay the GST/service tax difference amount for the contract period, without considering the objections and representation dated 07.08.2024.
  • In reply to the municipality’s stand, it was submitted that along with the petitioner’s representation dated 20.12.2023, the details of the GST amounts had in fact been furnished in statement form as Annexure-I and Annexure-II.

Respondent’s Arguments

  • Relying on written instructions dated 30.09.2024, the fifth respondent submitted that the petitioner was claiming the GST difference for a period of more than nine years and had never raised any objection during the contractual tenure except by representations dated 07.11.2023 and 07.08.2024.
  • Under the comprehensive government guidelines, the outsourcing agency must produce the remittance certificate towards recoveries (EPF, ESI, PT and GST) when submitting the following month’s bill. The petitioner had not produced the remittance certificate of GST to date.
  • GST had already been paid at the then prevailing rates of 12.36%, 14%, 14.5%, 15% and 18% for the period 01.11.2011 to 30.06.2020. The municipality was not responsible for late remittance by the petitioner or for penal interest raised by the GST Department; any excess amount would be paid once details were furnished.

Court Order / Findings

  • Having regard to the rival submissions, the Court did not adjudicate the monetary claim itself.
  • The petitioner was permitted to submit a fresh representation to the fifth respondent enclosing all necessary documents in support of the claim, including the details of the GST difference claimed and the remittance certificates, within two weeks from receipt of the order.
  • On receipt, the fifth respondent was directed to consider and dispose of the representation strictly in accordance with law, giving due opportunity of hearing, and upon verification of records to take an appropriate decision on its own merits, preferably within three months thereafter, releasing any amount found due towards GST. The writ petition was disposed of with no order as to costs.

Important Clarification

  • A claim for reimbursement of a GST/service tax differential under an outsourcing contract is contingent on the contractor producing remittance certificates and supporting details as required by the applicable government guidelines.
  • The service recipient is not responsible for late remittance of GST by the contractor, or for penal interest levied on the contractor by the GST Department.
  • Where the claim spans several years and documentation is incomplete, the writ court will ordinarily direct a time-bound consideration of a fresh representation with a hearing, rather than decide the entitlement itself.

Sections Involved

  • Article 226 of the Constitution of India – Writ jurisdiction of the High Court
  • Central Goods and Services Tax Act, 2017 and the erstwhile service tax regime – GST/service tax differential claimed for 01.11.2011 to 30.06.2020

Decision – In Favour of

The writ petition was disposed of with directions, in part in favour of the Assessee. The petitioner did not obtain an order for payment; the Court directed a fresh representation with supporting documents to be considered and decided within three months after a hearing, and any amount found due towards GST to be released.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: W.P. No. 21758 of 2024  |  CNR: APHC010414452024
  • Coram: Hon’ble Sri Justice B. Krishna Mohan
  • Date of Order: 26 December 2024  |  Disposal: Disposed of, no costs

Link to Download the Order

Click here to download the full order – M/s Manpower Servicing Agencies vs The State of Andhra Pradesh & Ors. (W.P. No. 21758 of 2024)