In WP No. 20885 of 2018-TEL HC- GST being levy which has been introduced in place of service tax, petitioner cannot absolve herself of liability to pay GST in place of service tax when such tax was agreed to be paid under Deed of Licence: Telangana HC
Justices T. Vinod Kumar & Pulla Karthik [12-12-2022]

Read Order: Smt K. Himabindu Vs. The TSRTC

Tulip Kanth

Hyderabad, February 1, 2023: In a case where the petitioner running a pop-corn stall had entered into a Deed of Licence whereby she had agreed to pay service tax in addition to the monthly licence fee fixed thereunder, the Telangana High Court has dismissed her claim for non-liability to pay GST on the licence fee as the GST, being a levy, had been introduced in the place of service tax

The Division Bench of  Justice T. Vinod Kumar and Justice Phulla Karthik held that the claim of the petitioner of her non-liability to pay GST on the licence fee was devoid of merit and said, “...by the introduction of GST, the provision of Finance Act, 1994, under which service tax was levied, has been subsumed into the GST.”

It was the petitioner’s case that the respondents-authorities had granted her license to set up business for running a pop-corn stall at the premises of the third respondent on payment of agreed licence fee. For the said purpose, she had entered into an agreement with the respondents , titled as ‘Deed of Licence’.

The petitioner contended that the respondents notwithstanding the terms of the Deed of Licence granted, demanded payment of GST, w.e.f. July 1, 2017 and that the said demand made was contrary to the terms of the Deed of Licence.

The respondents argued that the in terms of the Deed of Licence, the licencee had agreed to pay service tax on the monthly licence fee and that the same was also collected in addition to the licence fee payable periodically from the petitioner upto July 1, 2017.

It was submitted that with the introduction of GST w.e.f. July 1, 2017, in place of Service Tax, the respondents-authorities had demanded payment of GST being a levy substituting the service tax and no additional or new levy was sought to be imposed on the petitioner.

The Bench went through Clause (43) of the Deed of Licence wherein it was mentioned that the license would pay the service tax at the rate of 14% as applicable on payment of monthly license fee every month under notification No.14/2015, dated May 19, 2015, issued by the Govt. of India.

Not only this but the High Court also considered the fact that the document as placed by the respondents also showed that in addition to the licence fee for each month as fixed under the agreement titled as ‘Deed of Licence’, the respondents were also charging service tax separately and the same was being paid by the petitioner without any demur or protest.

Thus, the Bench held that it was not open for the petitioner to contend that demand of GST by the respondents was a new levy/imposition that had been fastened by the respondents as by the introduction of GST, the provision of Finance Act, 1994, under which service tax was levied, had been subsumed into the GST.

“Under the terms of Deed of Licence, since the petitioner had agreed to pay service tax in addition to the monthly licence fee fixed thereunder and the GST being a levy which has been introduced in the place of service tax, the petitioner cannot absolve herself of the liability to pay GST in place of service tax”, the Bench affirmed.

Thus, the Bench dismissed the petition.