Facts of the Case

Respondent No.3, Sri Anjaneya Swamy Vari Devasthanam, Kondagattu, issued an auction notification for the right to collect human hair accumulated at its temple premises for the period 01.08.2021 to 01.02.2022. The petitioner was declared the highest bidder at Rs.1,40,20,200/- and began collecting hair from 01.08.2021. Tender condition No.25 expressly required the successful bidder to pay 18% GST. After collecting hair for over eleven months without objection, the petitioner, shortly before expiry of the contract period, disputed the Devasthanam's demand for Rs.25,23,638/- towards 18% GST, claiming exemption under Notification No.2/2017-Central Tax (Rate) dated 28.06.2017, which exempts human hair (Sl.No.30, Chapter 0501), and also contending the transaction amounted to an outright sale of goods. The petitioner filed this writ petition seeking a declaration that the GST demand was illegal and a direction to hand over the collected human hair.

Issues Involved

  1. Whether the writ petition challenging a GST demand arising from a concluded tender/auction contract was maintainable under Article 226.
  2. Whether the exemption for human hair under Notification No.2/2017-Central Tax (Rate) applied to the petitioner's collection rights obtained through auction.
  3. Whether the transaction between the petitioner and the Devasthanam constituted an outright sale of goods or a supply of service.

Petitioner's Arguments

  • Human hair falls under Sl.No.30 (Chapter 0501) of the Schedule to Notification No.2/2017-Central Tax (Rate) dated 28.06.2017, which exempts it from GST, and therefore no GST was payable on the collected hair.
  • The transaction amounted to an outright sale of goods (human hair) and was accordingly covered by the same GST exemption applicable to sale of human hair.

Respondent's Arguments

  • The writ petition was not maintainable since the dispute arose out of a concluded contract, and contractual disputes between the petitioner and the Devasthanam cannot be adjudicated under Article 226.
  • The petitioner had participated in the tender fully aware of tender condition No.25 requiring 18% GST payment, and could not turn around after accepting the tender, collecting hair for eleven months and enjoying its benefit, to question that very condition.
  • The Devasthanam clarified in its counter that there was no outright sale of human hair; only a right to collect hair from the temple premises was auctioned, which amounted to a service rendered by the petitioner to the Devasthanam, not a sale of goods.

Court Order/Findings

  • The Court found that the petitioner had, with full knowledge of tender condition No.25, participated in the auction, quoted his price, was declared successful, and collected human hair for over eleven months without demur, raising the GST objection only near the end of the contract period.
  • The Court held that the arrangement was one of the petitioner rendering a service to the Devasthanam by collecting human hair, and not an outright sale of goods, so the exemption claimed under Notification No.2/2017-Central Tax (Rate) for sale of human hair was inapplicable.
  • The Court accepted the objection that the writ petition, arising from a concluded contractual/tender dispute, was not maintainable under Article 226.
  • Finding no merit, the Court dismissed the writ petition without costs.

Important Clarification

  • The GST exemption for “human hair” under Notification No.2/2017-Central Tax (Rate) applies to a sale of the goods itself; it does not automatically extend to a service of collecting such hair under a tender or auction arrangement.
  • A bidder who accepts a tender condition requiring payment of GST, participates with open eyes, and derives the benefit of the contract for a substantial period cannot later resile from that condition through a writ petition.
  • Disputes essentially contractual in nature, arising from concluded tender conditions, are generally not amenable to writ jurisdiction under Article 226.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — governs the levy of GST on supply of services, applicable to the collection arrangement held by the Court to be a service.
  • Notification No.2/2017-Central Tax (Rate) dated 28.06.2017 — exempts specified goods, including human hair (Sl.No.30), from GST when sold as goods.

Decision – In Favour of

Department/Revenue (and the Devasthanam). The writ petition was dismissed, and the petitioner's challenge to the 18% GST levy on collection of human hair failed.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Writ Petition No. 44816 of 2022
  • Coram: Justice P. Sam Koshy and Justice N. Tukaramji
  • Decision Date: 16.11.2023
  • Disposal Nature: Dismissed, without costs

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