Facts of the Case

The petitioner challenged Clause-36 of the e-auction notice dated 05.08.2022 issued by the Executive Officer/Fit Person of Arulmighu Samayapuram Mariamman Temple. The impugned clause required the successful auction bidder to obtain a No Tax Due Certificate, including under the Income Tax Act and the Goods and Services Tax (GST) law, before the refund of the security deposit. The petitioner contended that since human hair is exempt from GST, obtaining such a certificate from the GST authorities would not be feasible, rendering the condition impracticable and arbitrary.

Issues Involved

  1. Whether Clause-36 of the auction notice requiring a No Tax Due Certificate before refund of the security deposit was legally sustainable.
  2. Whether the High Court should interfere with the auction condition before the petitioner became a successful bidder and before the clause actually came into operation.
  3. Whether the writ petition challenging the auction condition was premature 

Petitioner’s Arguments

  • The petitioner submitted that human hair is exempt from GST, and therefore the GST Department may not issue a No Tax Due Certificate.
  • It was argued that making such a certificate a mandatory condition for refund of the security deposit was impractical and incapable of compliance.
  • Consequently, Clause-36 deserved to be quashed as being arbitrary and unworkable.

Respondents’ Arguments

  • The respondents defended the auction conditions and opposed interference at the pre-auction stage.
  • It was contended that the challenged clause would become relevant only if the petitioner emerged as the successful bidder and after the licence period expired.
  • Therefore, the writ petition was premature as no actual cause of action had arisen.

Court Order / Findings

The Madras High Court dismissed the writ petition as premature.

The Court observed that:

  • The auction process had not yet concluded and the petitioner had not become the successful bidder.
  • Clause-36 would operate only after expiry of the licence period and only if the petitioner succeeded in the auction.
  • Questions relating to GST exemption or tax liability depend upon the prevailing fiscal policy, which may change over time.
  • Since the impugned condition had not yet adversely affected the petitioner, judicial interference at this stage was unwarranted.

However, the Court clarified that if the petitioner subsequently became the successful bidder and was genuinely aggrieved by the implementation of Clause-36, he would be at liberty to challenge the condition at the appropriate stage, and the dismissal of the present writ petition would not prevent such future challenge. Accordingly, the writ petition was dismissed without costs.

Important Clarification

  • A writ petition challenging an auction condition before the condition actually affects the petitioner may be dismissed as premature.
  • Courts ordinarily refrain from examining hypothetical or contingent grievances.
  • Tax exemptions and fiscal policies are dynamic and may change with time; therefore, courts may decline to adjudicate issues based on future contingencies.
  • A party remains entitled to challenge the operation of an auction condition once an actual legal injury arises.

Section / Provision Involved

  • Article 226 of the Constitution of Indi

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785391721_2320compressed.pdf

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