Rejection of refund of service tax paid on non-taxable service - Writ Petition allowed with strictures on Department - On account of irresponsible behaviour of officers, entire Department gets bad reputation: High Court
By TIOL News Service
HYDERABAD, DEC 23, 2014: THE issue relates to rejection of refund of service tax paid by RITES, a Government of India Undertaking. The Petitioner undertook the activity of laying of optical fiber cables to BSNL and paid service tax. Later, on realizing that the activity did not attract service tax at the material time, filed a claim for refund of service tax paid. The original authority rejected the refund claim. On appeal, the Commissioner (Appeals) allowed the claim for the period falling within one year subject to verification of unjust enrichment. The original authority did not even grant refund sanctioned by the Commissioner (Appeals). The assessee is before the High Court.
The High Court deplored the attitude of the department in strong words and directed the authorities to refund the amount. The High Court held:
Being a responsible and disciplined organisation , the petitioner remitted a sum of Rs.14 ,19,850 /- towards service tax, though the activity undertaken by it was not in the purview of the Act. That was at the inception of the Act. The Deputy Commissioner i.e., 3rd respondent was supposed to advise the petitioner properly.
However, the remittances were received, without proper verification. Atleast when the claim for refund was made, the matter ought to have been examined objectively. An order of rejection was passed on 31.03.2002 almost on mechanical lines. The 2nd respondent i.e., Commissioner did exhibit objectivity, and acted reasonably. Relief was granted as regards the amounts paid between 23.01.2001 and 31.03.2001, subject to furnishing of proof to the effect that the burden was not passed on to the customers. He expressed his inability to overcome the rigor of limitation under Section 11-B of the Act as regards substantial part of the claim. At the same time, he left it open to the petitioner to pursue other remedies.
The 3rd respondent did not comply with the first part of the order passed by the 2nd respondent, and refused to refund any amount to the petitioner. Once the petitioner asserted that it did not pass on the liability of service tax to its customer i.e .. BSNL, it could have been verified as to whether BSNL paid any amount to the petitioner towards service tax. The irresponsibility on the part of the incumbents, who held the office of the 3rd respondent from time to time, is evident from the fact that they just sat over the matter and did not release even a single rupee to the petitioner . If this is the treatment accorded to a Government of India undertaking, one can easily understand the type of treatment, which the officials of that Department are exhibiting towards ordinary citizens.
Another objectionable attitude exhibited by the 3rd respondent is evident from the counter affidavit itself. The ground, which was not raised either when the order dated 31.03.2002 was passed or before the appellate authority, is stated in paragraph 12 of the counter affidavit. It is to the effect that the Board issued Circular, dated 18.12.2002 clarifying that the activity of laying of cables and erection of equipment would attract service tax, since it falls under the technical assistance rendered by Consulting Engineer. The lack of bona fides on the part of the deponent of the counter affidavit is evident from the fact that though the very Board issued Circular dated 13.05.2004 stating that the Circular dated 18.12.2002 was issued by mistake and stands withdrawn, no reference was made to it. The attitude of the deponent is worse than that of a seasoned litigant. Unfortunately, it is on account of the irresponsible behaviour of such officers, that the entire Department gets bad reputation. By resorting to objectionable means, the Department is trying to enrich itself, at the cost of the petitioner.
We therefore allow the writ petition and direct that the amount of Rs.13 ,08,811 /-, which remained unpaid, shall be refunded to the petitioner with interest, as provided for under the Act, within four (4) weeks from today. If the amount is not refunded, the official who is holding office of the 3rd respondent shall be held personally responsible in the event of any proceedings initiated under the Contempt of Courts Act and this Court would consider the feasibility of issuing directions for making adverse entries in the service record of such officer.
(See 2014-TIOL-2324-HC-AP-ST)
