Subsumption Of Service Tax Will Not Absolve Liability To Pay GST If Service Tax Was Agreed To Be Paid In Agreement : Telangana High Court

The petitioner was granted license by the Telangana State Road Transport Corporation to set up business for running popcorn stall on payment of agreed license fee and for the said purpose she had entered into agreement titled ‘Deed of License’.

Sri. D.V. Chalapathu Rao, Counsel for Petitioner contended that TSRTC demanded payment of GST, w.e.f. 01.07.2017 and that the said demand made is contrary to the terms of Deed of License.

Per contra, Sri Thoom Srinivas, Standing Counsel on behalf of TSRTC submitted that in terms of Deed of License, the licensee had agreed to pay service tax on the monthly license fee in addition to the license fee payable periodically, and with introduction of GST w.e.f. 01.07.2017 in place of Service Tax, TSRTC demanded payment of GST being a levy substituting the service tax.

In Deed of License entered into by the Petitioner, it was specified that the licensee shall pay the service tax at 14% on payment of monthly license fee. The TSRTC were charging the service tax separately and the same was being paid by the petitioner without any demur.

“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.”

Thus, the Court held that petitioner's claim of her non-liability to pay GST on the license fee was devoid of merit and the writ petition was dismissed on this ground.

CASE TITLE: Smt K. Himabindu v. TSRTC

Citation: 2023 LiveLaw (Tel) 3 

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