The dispute between a Hispanic art group and the General Service Administration over some photos that GSA removed Monday from its Latin American art exhibit is heating up. Yesterday it escalated into talk of a legal battle and the Hispanic group's threatened withdrawal of the entire show.

And Wednesday night, the D.C. Commission on the Arts and Humanities got into the controversy. It passed a resolution calling upon the Federal Council of the Arts and the Humanities and the National Council for the Arts to "investigate GSA's actions regarding the censorship of the art exhibit to promote mutual understanding of National Hispanic Heritage Week."

The D.C. Commission said it was "concerned and dismayed" by the GSA's action, which it said "violated the spirit of artistic expression." The resolution says "the artists involved deserve an apology."

GSA has claimed it removed eight panels of photos and captions because they are "politically sensitive," and therefore not in compliance with a law prohibiting any kind of political forum or expression in government buildings.

On Tuesday, both GSA and GALA Inc., the Hispanic organization that arranged and installed the show reexamined the banned panels. GALA Inc. voluntarily eliminated two -- one with pictures of tanks, and another with text referring to a "military junta." At that time, GSA graphics director Peter Masters told GALA yesterday "we could live with all the remaining pictures," Masters said, but added that some of the captions would have to be rewritten.

"According to our lawyer," said Rebecca Medrano, administrative director of GALA, "the law states a government building may not be used for any political meetings. Where does it say you can't make political statements or political art?"

GALA representatives -- who have threatened to dismantle the show unless the disputed photo panels are included -- had said the exhibit presents "the reality of Latin America."

The part of the Code of Federal Regulations pertaining to the use of spaces in GSA-controlled buildings says "meeting places may not be used . . . Meetings or activities having a partisan, political, sectarian, or similar nature or purpose."

GSA director of public information Richard Vawter said that a GSA lawyer has told the agency that this is a basis for banning the pictures.

But Vawter adds that "we have a contract with GALA and we feel we have the privilege of using any part of the exhibit or whatever."

However, Medrano said yesterday that if GSA cites breach of contract, "we'll cite breach of contract on GSA's part because we contracted to put it up a certain way." GALA is to be paid $2,088 for the exhibit. Medrano said they have received no money yet.