GST can’t be Deducted from Salary of Employees sponsored by UPNL: Uttarakhand HC [Read Judgment]

Salary - GST

A division bench of the Uttarakhand High Court has directed the State Government to not to deduct GST or Service Tax from the salary of the employees sponsored by the Uttarakhand Purv Sainik Kalyan Nigam Ltd (UPNL).

In the instant case, the Uttarakhand UPNL Savinda Karamchari Sangh has filed a writ petition before the High Court highlighting the exploitation of the workmen by the State Government as well as local bodies. The petitioners contended that though, the workmen are being paid the honorarium of Rs.8,400/-, however, the GST @18% and 2.5% Service Tax are also deducted from their salary. It is also highlighted that the administrative, disciplinary and financial control on each and every employee is of the establishment, in which, they are working. They are discharging the same duties which are being discharged by their counterparts. There is only a meager increase in their honorarium from time to time.

It was submitted before the Court that the State Government in its own wisdom vide letter dated 09.06.2016 had directed that in future UPNL will sponsor ex-servicemen only and thereafter, vide letter dated 05.07.2016 UPNL has been allowed to sponsor dependants of ex-servicemen also.

It was noted that the main object of the company is also to provide financial assistance to the ex-servicemen, their dependents, family members of ex-servicemen including imparting them necessary training.

The bench comprising Justices Sharad Kumar Sharma and Rajiv Sharma noted that the employees have a legitimate, statutory and fundament rights to be regularized. The workmen are being paid a meager honorarium and out of the same, GST and Service Tax are also deducted. Every workman is entitled to the living and fair wage to make both ends meet. The UPNL has not obtained the license as Contractor nor has registered under the Act qua most of the departments and local bodies, the bench observed.

Allowing the petition, the bench said that “Salary is the property within the meaning of Article 300-A of the Constitution of India. No GST or Service Tax can be deducted from the salary of the petitioners without any authority of law.”

“It is reiterated that the Principal Employer is the State Government. The master-servant relationship exists between the State Government and its employees, even though sponsored by the UPNL. The employees sponsored by UPNL are discharging similar duties which are being discharged by their counterparts. They are qualified and fulfill other eligibility criteria, as per the recruitment and promotion rules,” the bench said.

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