Facts of the Case

Three contractors — N. Venkata Raju, M/s. SRM Constructions (represented by its proprietor) and Vanapalli Chiranjeevi Sreenivas — had executed works for the Irrigation Department, Government of Andhra Pradesh, under several agreements between 2021 and 2022, including agreements dated 2 March 2022, 28 June 2021 and 23 June 2022, together totalling approximately Rs. 49,22,445, inclusive of 12% GST.

Despite completing the works, having them inspected and quality-checked, and having relevant entries made in the Measurement Books, the contractors did not receive payment of their final bills despite repeated requests, causing them financial difficulty.

They filed Writ Petition No. 31325 of 2022 before the Andhra Pradesh High Court seeking a mandamus declaring the non-payment illegal and arbitrary, and directing release of the amounts due with GST and interest.

The Executive Engineer's written instructions, placed before the Court, explained that the bills were pending only because the Letter of Credit (LOC) required for payment had not yet been released from higher authorities, and that requisitions for release of LOC were being pursued.

Issues Involved

  1. Whether the Irrigation Department's non-payment of bills for admittedly completed works, attributed to non-release of LOC, was justified.
  2. Whether the petitioners were entitled to a direction for release of the payments due, inclusive of the GST component built into the agreed amounts.

Petitioner's Arguments

  • The works under all the cited agreements had been completed within the stipulated time, inspected, quality-checked, and duly recorded in the Measurement Books.
  • Despite repeated requests, the amounts due — totalling about Rs. 49,22,445 with 12% GST — remained unpaid, causing severe financial hardship to the contractors.

Respondent's Arguments

  • The bills were pending solely because of non-release of the Letter of Credit (LOC) to the required extent; regular requisitions were being made to higher authorities and payment would follow once LOC was released.

Court Order / Findings

  • The Court held that, given the undisputed execution of the works and non-payment of the resulting bills, the respondents' action in withholding payment was unjust and not tenable.
  • The Writ Petition was disposed of with a direction to the respondents to arrange payment of the amounts due and payable to the petitioners (after statutory deductions) as expeditiously as possible, and in any event within eight weeks from receipt of the order.
  • The petitioners were left free to separately raise any claim for interest before the appropriate forum, if so advised.
  • No costs were awarded; pending applications were closed.

Important Clarification

This order enforces payment of an admitted contractual dues, and the 12% GST figure is simply part of the agreed contract value the department owed — the Court was not called upon to, and did not, interpret or apply GST law. Contractors executing government works contracts should note that GST forms part of the billed amount but disputes over its release are treated as ordinary payment-delay matters, not tax disputes.

Sections Involved

  • Constitution of India, 1950 — Articles 14, 19(1)(g) and 21, and Article 226 (writ jurisdiction), invoked in the petition.
  • Code of Civil Procedure, 1908 — Section 151, under which the interim application for release of funds was filed.
  • Central Goods and Services Tax Act, 2017 — referenced only as the 12% GST component included in the contractually agreed bill amount, not a subject of adjudication.

Decision – In Favour of

Decided in favour of the petitioners (the contractors), who obtained a direction for payment of their outstanding bills within eight weeks — a contract-payment enforcement, not a ruling on any GST-law question.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: Writ Petition No. 31325 of 2022
  • Coram: Justice Ninala Jayasurya
  • Date of Order: 20 July 2023

Link to Download the Order

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