Patna High Court
Mahavir Sharmik And Nirman Swalambi ... vs State Of Bihar on 4 December, 2023
Bench: Chief Justice, Partha Sarthy
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.7635 of 2023
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Mahavir Sharmik and Nirman Swalambi Sahkari Samiti Limited a Co-
operative Society having its office at Walipur, Jamalpur, Munger, Bihar-
811214 through its Chairman Abhishek Kumar (Male), aged about 20 years,
son of Rajkapur Singh, resident of Chandanpura, Jamalpur, Munger, Bihar-
811214.
... ... Petitioner/s
Versus
1. State of Bihar through Commissioner of State Tax, Bihar, Patna having its
office at Vikas Bhawan, Patna.
2. Addl. Commissioner of State Tax (Appeals), Bhagalpur Division, Bhagalpur.
3. Asst. Commissioner of State Tax, Munger, Bhagalpur, Bihar.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mr.D.V.Pathy, Advocate
Mr. Hiren Karan, Advocate
For the Respondent/s : Mr.Raghwanand (GA-11)
Mr. Pratik Kumar, AC to GA-11
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CORAM: HONOURABLE THE CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE PARTHA SARTHY
ORAL JUDGMENT
(Per: HONOURABLE THE CHIEF JUSTICE)
Date : 04-12-2023
The petitioner challenges an assessment order dated
11.01.2021
(Annexure-3 series), as confirmed by the first
Appellate Authority under the Bihar Goods and Services Tax
Act, 2017 (for brevity "BGST Act") vide orders dated
10.01.2023 (Annexure-4 series); by a writ petition, especially
since the Tribunal under the BGST Act has not yet been
constituted and the petitioner is deprived of a consideration in
the second appeal, as provided for in the statute. As per the
Patna High Court CWJC No.7635 of 2023 dt.04-12-2023
notification issued by the Government, pending constitution of
the Tribunal there is a stay of recovery on payment of 20 per
cent of the amounts disputed which remains to be paid, as per
the assessment order. However, in the present case, the
petitioner contends that the levy is not sustainable going by the
specific notification which exempts the activity carried on by
the petitioner; being removal of solid waste which is not a
works contract and there is no supply of goods as would be
required by the definition of 'works contract' under the BGST
Act.
2. The petitioner is a Cooperative Society registered
under the BGST Act, who was issued with a notice under
Section 74 quantifying the demand of tax and penalty for the
Assessment Year 2019-20; specifically from November, 2019-
February, 2020. The copy of the notices issued are produced as
Annexure-1 series. Obviously, the tax levy has been proposed
on the basis of the deductions made by the Nagar Parishad,
Jamalpur under the Income Tax Act. The assessee contends that
the mere deduction of tax on income, a direct tax, cannot lead to
the levy under Goods and Services Tax Act being made, which
is an indirect tax.
3. The assessee admittedly did not respond to the
Patna High Court CWJC No.7635 of 2023 dt.04-12-2023
notices and Annexure-2 series of orders were passed demanding
the tax under the BGST Act. The demand notices are also
annexued as Annexure- 3 series. The petitioner filed an appeal
specifically pointing out Notification No. 12/2017 issued by the
Government of India granting exemption from payment at tax in
relation to a function entrusted to a Municipality under Article
243W of the Constitution of India. It was argued that the
invocation of jurisdiction under Section 74 was illegal, without
authority and wholly improper. The appeal, however, was
dismissed by Annexure-4 series despite a similar appeal filed by
another assessee having been allowed by the very same
Appellate Authority as per Annexure-6 order.
4. Learned counsel for the petitioner, Shri D.V. Pathy
took us through the notification issued by the Central
Government, the specific work order issued to the petitioner by
the Nagar Parishad, Jamalpur, produced as Annexure-5 and also
the appellate order produced as Annexure-6.
5. Learned Government Advocate Shri Raghwanand,
however, pointed out that it is a works contract under which the
tax was levied under the BGST Act. The contract awarded to the
petitioner is produced as Annexure-5 which specifically
indicates that for the eleven months, which is the subject of
Patna High Court CWJC No.7635 of 2023 dt.04-12-2023
consideration, the petitioner has been given the work of
collection and disposal of waste materials from each household,
shop and commercial centres as also sanitation work of
drainages/road in the specified seventeen wards of the
Municipality. Other conditions under which the sanitation work
is to be carried out, which includes management of solid waste
are also specified in the work order. The work granted to the
petitioner has to be tested with the exemption granted by the
Central Board of Indirect Taxes and Customs of the Ministry of
Finance, Government of India, which is produced as Annexure-
7.
6. Specific reference has to be made to the exemptions
granted between the period 01.07.2012 to 10.07.2014 and
11.07.2014 to 30.06.2017 which is specifically referred to in the
circular dated 30.05.2018, which is as under:-
"In the period from 01.07.2012 to 10.07.2014
"Services provided to Government, a local
authority or a governmental authority by way of
"(a) carrying out any activity in relation to any
function ordinarily entrusted to a municipality
in relation to water supply, public health,
sanitation conservancy, solid waste management
or slum improvement and upgradation; or ...
... ..."
In the period from 11.07.2014 to 30.06.2017
"Services provided to Government, a local
authority or a governmental authority by way of
(a) water supply, public health, sanitation
conservancy, solid waste management or slum
Patna High Court CWJC No.7635 of 2023 dt.04-12-2023
improvement and upgradation ... ... ..."
Hence, the work carried out by the petitioner is exempt from
payment of tax under the BGST Act.
7. We also have to notice the definition of works
contract under the BGST Act, which is as below:-
"works contract" means a contract for building,
construction, fabrication, completion, erection,
installation, fitting out, improvement,
modification, repair, maintenance, renovation,
alteration or commissioning of any immovable
property wherein transfer of property in goods
(whether as goods or in some other form) is
involved in the execution of such contract"
8. There is no supply of goods in the solid waste
management disposal work awarded to the petitioner. In the
above circumstances, the activity of the petitioner regulated by
the work order produced as Annexure-5 and the consideration
received for the same would be exempt from the BGST Act. It is
also crystal clear that on similar circumstances, by Annexure-6
order, the Appellate Authority had allowed the appeal in the case
of a different assessee, who had been carrying on the very same
work of solid waste disposal in the very same Municipality.
9. In the above circumstances, the assessment orders
produced as Annexure-3 series, the demand notices and
Annexur-4 series orders in appeal are set aside. The asseee-
Patna High Court CWJC No.7635 of 2023 dt.04-12-2023
petitioner is directed to produce the details of the tax deduction
at source made by the Municipality under the Income Tax Act
and provide the evidence, of the consideration made by the
Municipality on which the tax deductions were effected under
the Income Tax Act, being one for solid waste disposal work.
The assessee shall appear before the Assessing Officer within a
month from the date of receipt of the certified copy of this
judgment and produce materials in substantiation. The
Assessing Officer shall consider the same and pass orders in
accordance with law after taking note of the declaration made
herein regarding the non-exigibility of tax on solid waste
management activities and sanitation work carried on at the
instance of the State or the local authorities.
10. The writ petition stands allowed with the above
directions.
(K. Vinod Chandran, CJ)
(Partha Sarthy, J)
P.K.P./-
AFR/NAFR
CAV DATE
Uploading Date 06.12.2023
Transmission Date
