Hyderabad: A panel of the Telangana High Court ruled that collection of Value Added Tax/Turnover Tax over and above Goods and Services Tax (GST) is impermissible post the new tax regime. The panel speaking through Justice Vinod Kumar pointed out that the ‘respondents were either ignorant of the implementation of GST and repealing of VAT Act or turned a blind eye to the contractual obligations probably under the impression that the contractor wouldn’t invite their wrath by questioning his actions risking his future with the respondent.’ The panel of Justice MS Ramachandra Rao and Justice T Vinod Kumar allowed a writ petition filed by Chandriah, a civil contractor.

A sum of Rs 11.9 lakh towards VAT, 1% of the GST, was retained by the authorities from the construction work done by the petitioner for the agriculture market committee at Cheriyal in Siddipet. In the agreement between the parties that VAT shall be in addition to the amounts specified in the agreement, the work was valued at about Rs 2.75 crore. The petitioner contended that after the GST Act, 2017, the petitioners would be liable to be taxed under the GST only. The actions of the authorities in deducting VAT, etc on running bills was challenged. The panel specifically recorded a finding that there existed no liability to pay an extra 5% on the contract executed to pay and deductions were upon a repealed enactment. The panel allowed the writ plea and directed the authorities to reimburse the amount so collected.

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