Facts of the Case

The petitioner, Naresh Women Hair Enterprises, represented by its proprietor Ch. Naresh, filed the writ petition challenging the action of Respondent No. 3, Sri Anjaneya Swamy Vari Devasthanam, Kondagattu, in incorporating a condition requiring payment of GST @ 18% by the highest bidder in the auction/tender process for collection of human hair, described in the proceedings as “Tala Neelalu.”

The challenge arose from an e-procurement Tender Notification in Rc.No. L/118/2022 dated 08.08.2022, relating to collection of human hair for the stated period from 01.08.2022 to 31.07.2023. The petitioner sought a declaration that imposition of the 18% GST condition was illegal, arbitrary, unconstitutional, without power or jurisdiction, and contrary to the claimed Central Government/Ministry of Finance guidelines exempting human hair from payment of State GST or Central GST.

The petitioner invoked constitutional protections under Articles 14 and 19(1)(g) and approached the High Court under Article 226 of the Constitution of India seeking a writ in the nature of mandamus to set aside the disputed GST condition.

The record further shows that an interlocutory application sought stay of further proceedings pursuant to the e-procurement tender notification, insofar as the tender required payment of GST at 18% by the highest bidder. Another application under Section 151 CPC sought impleadment of a proposed fourth respondent.

However, upon examining the record and submissions, the High Court found that although the petitioner had been permitted to participate in the tender process, it did not choose to participate. Meanwhile, the tender process had already been finalised in favour of third parties and confirmed.

Issues Involved

The principal issues arising from the proceedings were:

  1. Whether Respondent No. 3 could lawfully incorporate a tender condition requiring the highest bidder to pay GST @ 18% on the highest bid amount in an auction for collection of human hair (Tala Neelalu).
  2. Whether the disputed GST condition was illegal, arbitrary or unconstitutional and violative of Articles 14 and 19(1)(g) of the Constitution of India.
  3. Whether the condition was allegedly contrary to guidelines relied upon by the petitioner concerning exemption of human hair from State GST and Central GST.
  4. Whether any effective relief survived once the petitioner, despite being permitted to participate, did not participate in the tender and the tender process had already been finalised and confirmed in favour of third parties.
  5. Whether the petitioner’s substantive grounds regarding the legality of the GST levy should nevertheless remain open for consideration in an appropriate future writ proceeding at the proper stage.

Petitioner’s Arguments

The petitioner questioned the action of Respondent No. 3 in incorporating the condition requiring payment of GST @ 18% on the highest bid amount under the impugned tender notice.

The petitioner’s pleaded case was that the condition was highly illegal, arbitrary and unconstitutional, and violated Articles 14 and 19(1)(g) of the Constitution of India. It was further alleged that Respondent No. 3 lacked the power or jurisdiction to impose such a condition.

The petitioner also asserted that the condition violated guidelines issued by the Ministry of Finance, Department of Revenue, Government of India, which, according to the petitioner, exempted human hair from payment of either State GST or Central GST. On this basis, the petitioner sought setting aside of the tender condition.

The petitioner also sought interim protection against further tender proceedings insofar as payment of GST at 18% by the highest bidder was concerned.

Respondents’ Arguments

The order records that the Court heard the learned Government Pleader for Endowments appearing for Respondent Nos. 1 and 2 and the learned Standing Counsel appearing for Respondent No. 3.

However, the final order does not separately reproduce detailed substantive arguments advanced by the respondents regarding the taxability or exemption of human hair under GST law. Therefore, no additional argument should be attributed to the respondents beyond what is expressly recorded.

The decisive factual position emerging from the record and submissions was that the petitioner had been permitted to participate in the tender process but had not chosen to participate, while the tender had already been finalised and confirmed in favour of third parties.

Court Order / Findings

The Telangana High Court examined the record and submissions made on both sides and recorded that:

  • the petitioner had been permitted to participate in the tender process;
  • the petitioner had not chosen to participate in the tender process;
  • the tender process had already been finalised in favour of third parties; and
  • the tender had also been confirmed.

In view of these developments, the Court held that nothing survived in the writ petition and accordingly dismissed it.

Significantly, the Court did not finally close the door on the substantive legal grounds raised by the petitioner. It expressly left those grounds open to the petitioner to agitate in an appropriate writ petition at the appropriate stage.

The writ petition was dismissed with no order as to costs, and all pending miscellaneous petitions, if any, were directed to stand closed. The concluding endorsement on page 5 of the uploaded order also records that the writ petition was dismissed with no costs.

Important Clarification

The most important clarification is that the Telangana High Court did not decide on merits whether human hair was taxable at 18% GST or exempt from GST. The Court did not pronounce a final substantive ruling on the legality of the 18% GST condition.

The writ petition was dismissed because, despite being permitted to participate in the tender process, the petitioner did not participate, and the tender process had already been finalised and confirmed in favour of third parties. Consequently, the Court found that nothing survived for adjudication in that writ petition.

Therefore, this judgment should not be reported as a ruling affirming 18% GST on human hair, nor should it be described as holding that human hair is taxable at 18%. Equally, it should not be represented as a final judicial declaration that human hair is exempt from GST. The substantive grounds remained undecided.

The Court expressly preserved the petitioner’s right to raise those grounds in an appropriate writ petition at the appropriate stage. This reservation is legally significant and forms an essential part of the order.

Sections / Legal Provisions Involved

Article 226 of the Constitution of India – The writ petition was instituted under the High Court’s constitutional writ jurisdiction seeking a writ, order or direction, particularly in the nature of mandamus.

Article 14 of the Constitution of India – Invoked by the petitioner while alleging that the disputed GST tender condition was illegal, arbitrary and unconstitutional.

Article 19(1)(g) of the Constitution of India – Invoked by the petitioner in challenging the tender condition as affecting the constitutional freedom to practise any profession or carry on any occupation, trade or business.

Section 151 of the Code of Civil Procedure, 1908 – Invoked in interlocutory proceedings concerning impleadment and interim relief as reflected in the uploaded record.

GST @ 18% Tender Condition – The direct subject matter of challenge was the tender condition requiring payment of GST at 18% on the highest bid amount.

Important statutory accuracy note: The uploaded order does not expressly identify any specific section of the CGST Act, 2017, IGST Act, 2017, or Telangana GST Act, 2017 as the basis of the disputed 18% levy. Accordingly, no unmentioned GST section number has been attributed to the Court.

Link to download the order -

https://mytaxexpert.co.in/uploads/1783067433_384compressed.pdf   

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