Facts of the Case

This is a mandamus petition before the Madurai Bench of the Madras High Court seeking disbursement of service tax dues, interest and penalty for works contract services rendered during 2015 to 2017. This is a pre-GST Service Tax reimbursement matter arising from a government works contract; GST is not at issue, though the Assistant Commissioner of Central GST and Central Excise was arrayed as a respondent since the same departmental office now administers both taxes.

The petitioner, P.S. Stalin, a Registered Class I Contractor with the Public Works Department (PWD), Government of Tamil Nadu, had executed works contract services for the PWD during 2015-2017. A Division Bench of the Madras High Court had earlier held, in separate proceedings, that the petitioner was liable to pay service tax on such works, but granted him liberty to collect the tax amount from the Government (as the contracting authority) and remit it to the Department. Based on this liberty, the petitioner made a representation dated 26.07.2023 to the PWD and connected departments seeking disbursement of the service tax, interest and penalty amount so that he could pay it over to the tax authorities, but the Government did not act on his representations despite this being followed up repeatedly.

Issues Involved

  1. Whether the Government (PWD and connected departments) should be directed to consider and decide the contractor's claim for reimbursement/disbursement of the service tax amount payable on works contracts executed for the Government during 2015-2017.

Petitioner's Arguments

  • Pursuant to the earlier Division Bench ruling permitting him to collect the service tax amount from the Government before remitting it to the Department, he had made a representation dated 26.07.2023, which the Government had failed to consider despite several follow-up representations.
  • Sought a mandamus directing the Principal Secretary (PWD) and connected respondents to disburse the service tax, interest and penalty amount within a time frame fixed by the Court.

Respondent's Arguments

  • The learned Additional Government Pleader submitted that the petitioner's claim was under consideration by the Government.

Court Order / Findings

  • The Court held that the first respondent (Principal Secretary, PWD) ought to consider the petitioner's case, noting the Government's own submission that the claim was under consideration.
  • It directed the first respondent to consider the petitioner's case and pass appropriate orders within twelve weeks from receipt of a copy of the order.
  • The writ petition was allowed in these terms, without costs; the Court did not itself determine the quantum or entitlement to the service tax reimbursement, leaving that decision to the Government within the stipulated time frame.

Important Clarification

This order is a direction to decide, not a final adjudication of the contractor's entitlement to service tax reimbursement — the Government was simply directed to process and decide the pending representation within twelve weeks. It concerns liability and reimbursement of pre-GST service tax on works contracts and does not touch upon GST law.

Sections Involved

  • Finance Act, 1994 — Service tax on works contract services
  • Article 226, Constitution of India — Writ of mandamus

Decision – In Favour of Petitioner (Contractor)

The Madras High Court allowed the writ petition, directing the Government to consider and decide the contractor's pending representation for service tax reimbursement within twelve weeks, without itself ruling on the merits of the claim's quantum.

Case Details

  • Court: Madurai Bench of the Madras High Court
  • Case No.: W.P.(MD) No. 18774 of 2023
  • Coram: Hon'ble Mrs. Justice S. Srimathy
  • Date of Order: 17 August 2023

Link to Download the Order

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