Facts of the Case

The petitioner, B. Pardasaradi Reddy, a contractor from Srikalahasti, Tirupati District, had executed two checkdam construction works across the Gangulapudi Kalava for the Irrigation and CAD Department of Andhra Pradesh under agreements dated 2017-18. He approached the High Court seeking a writ of mandamus directing the State to prepare final bills and release the withheld amounts payable to him, including the GST component on the executed works, along with the Further Security Deposit (FSD) and Earnest Money Deposit (EMD). The petitioner contended that the Government had itself admitted his entitlement to these amounts but had simply failed to release payment. This is essentially a government contracts payment dispute in which GST forms one component of the money withheld — the case does not turn on any question of GST law, rate, or classification.

Issues Involved

  1. Whether the State's admitted non-payment of withheld contract dues, including the GST component, security deposit and earnest money, was arbitrary and required judicial intervention.
  2. What rate of interest, if any, should apply to the delayed payment.

Petitioner's Arguments

  • The respondents had themselves admitted the petitioner's entitlement to the withheld amounts, yet no payment had been made.
  • Such non-payment of admitted dues was arbitrary and high-handed, warranting the Court's interference, particularly in light of an earlier Single Judge decision (W.P. No. 10038 of 2021 and batch) holding such delays impermissible.

Respondent's Arguments

  • The Government Pleader for Irrigation filed a counter affidavit stating that the amount had not been paid due to non-availability of funds, and that payment would follow as soon as the budget was released.

Court Order / Findings

  • Relying on an earlier Division Bench ruling (Writ Appeal No. 724 of 2021 and batch, dated 12.10.2023) on the same category of dues, the Court directed the respondents to clear the admitted amount, including interest at 6% per annum, within six weeks of receipt of the order.
  • If payment was delayed beyond six weeks, interest would escalate to 12% per annum until actual payment.
  • The Court clarified that, once the admitted amount (with interest) was paid, the FSD/EMD withheld as deposits should also be released without further interest, since the defect liability period under the agreement had already expired.
  • The writ petition was disposed of without costs.

Important Clarification

The order confirms that government departments cannot indefinitely withhold contractor dues — including the GST component built into a works contract bill — merely citing budgetary constraints, once the department has itself admitted the liability. Contractors facing similar delays in release of GST-inclusive final bills on government works may find this precedent useful, though it turns on general principles of contractual and constitutional fairness rather than any interpretation of the GST statute.

Sections Involved

  • Article 226, Constitution of India, 1950
  • Central Goods and Services Tax Act, 2017 — GST payable as part of the works contract value (referenced only as a component of the amount due, not interpreted)

Decision – In Favour of

Decided in favour of the petitioner-contractor; the State was directed to clear the withheld amounts, including the GST component, with interest, and to release the security/earnest money deposits thereafter.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: Writ Petition No. 13051 of 2023
  • Coram: Hon'ble Sri Justice Venkateswarlu Nimmagadda
  • Date of Order: 8 November 2023

Link to Download the Order

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