Facts of the Case

The petitioner, a works contractor, had entered into various agreements with the State of Andhra Pradesh and other State respondents for execution of works in Kurnool District. The petitioner completed the works as per the agreements, and execution was duly entered into measurement books prepared by the respondent authorities without any defects being noticed. While the amount for execution of the works was paid, the Earnest Money Deposit, Withheld Amounts, and GST component relating to the works were not released even after completion of the defect liability period. Despite repeated approaches by the petitioner, the respondents failed to release the amounts, leaving the petitioner no option but to approach the High Court of Andhra Pradesh at Amaravati by way of this writ petition.

Issues Involved

  1. Whether the respondents were justified in withholding the Earnest Money Deposit, Withheld Amounts, and GST component relating to works duly executed by the petitioner, even after expiry of the defect liability period.
  2. Whether the petitioner was entitled to a direction from the Court for release of these amounts in the absence of any justification shown by the respondents.

Petitioner's Arguments

  • The petitioner completed all works under the agreements with the respondents in Kurnool District, duly measured and recorded without any defects noticed.
  • Although payment for execution of the works was released, the Earnest Money Deposit, Withheld Amounts, and GST component were not released even after completion of the defect liability period.
  • The petitioner made repeated representations for release of the amounts, but the respondents failed to act, compelling this petition.

Respondent's Arguments

  • The learned Government Pleader appearing for the respondents submitted that the respondents are ready to pay the amounts due to the petitioner.
  • No justification was placed on record by the respondents for continued withholding of the Earnest Money Deposit, Withheld Amounts, and GST component.

Court Order / Findings

  • The Court heard learned counsel for the petitioner and learned counsel for the respondents, and perused the material on record.
  • The Court found that there was no justification in withholding the Earnest Money Deposit, Withheld Amounts, and GST component even after completion of the defect liability period.
  • The Court deemed it appropriate to direct the respondents to release the amounts due to the petitioner within a reasonable period.
  • The writ petition was disposed of, directing the respondents to release the Earnest Money Deposit, Withheld Amounts, and GST component within a period of four (04) weeks from receipt of a copy of the order, with no order as to costs.
  • Pending miscellaneous petitions, if any, stood closed as a consequence.

Important Clarification

  • Where a works contractor completes contracted works to the satisfaction of the executing authority — evidenced by defect-free measurement books — and the defect liability period expires, continued withholding of Earnest Money Deposit, Withheld Amounts, and the GST component requires justification from the department.
  • In its absence, and particularly where the Government Pleader concedes readiness to pay, courts have directed release within a fixed, short timeframe rather than relegating the contractor to further process.
  • This order does not adjudicate quantum; it proceeds on the respondents' own concession that the amounts are payable and merely fixes a timeline.

Sections Involved

  • Article 226 of the Constitution of India — invoked by the petitioner to seek a writ directing release of amounts withheld by State authorities.
  • Central Goods and Services Tax Act, 2017 / Andhra Pradesh Goods and Services Tax Act, 2017 — governs the GST component payable on works contract services, non-release of which was in issue.

Decision – In Favour of

The writ petition was disposed of in favour of the petitioner (assessee/contractor), with the Court directing the respondents to release the Earnest Money Deposit, Withheld Amounts, and GST component within four weeks, and with no order as to costs.

Related Case Laws

The Andhra Pradesh High Court has disposed of several similarly patterned writ petitions by Kurnool District works contractors seeking release of withheld EMD, Withheld Amounts, and GST component, including Writ Petition No. 26115 of 2023 and Writ Petition No. 26036 of 2023. While these share a common fact pattern and Bench, each carries its own distinct case number and stands as a separate petition, including the present Writ Petition No. 26109 of 2023.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: Writ Petition No. 26109 of 2023
  • Coram: Hon'ble Sri Justice Venkateswarlu Nimmagadda
  • Date of Order: 03.11.2023
  • Parties: Petitioner (works contractor) vs. State of Andhra Pradesh and other State respondents

Link to Download the Order

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