2014 (8) TMI 150 - HC - Service Tax

Denial of refund of duty and interest - Petitioner filed application claiming refund of service tax wrongly paid by their collecting agent on services provided to them - Competent authority rejected refund claim and addressed an communication instead of passing an order - Whether competent authority was obliged to hear petitioner and consider its claim on its own merits and in accordance with law - Held that - exercise contemplated by law is quasi judicial in nature, we are of the opinion that such communication cannot be sustained. In the given facts and circumstances the Competent Authority was obliged to hear the petitioner and consider its claim on its own merits and in accordance with law. Thereafter it was expected that the Competent Authority should pass a reasoned order and duly communicate it to the petitioner. - It is such an exercise that is contemplated in the given facts and circumstances. Since we have found that the same has not been undertaken, the communication cannot be sustained. It is accordingly quashed and set aside - Decided in favour of assessee.

Summary

Issues:
1. Validity of the communication as an order on the application for refund of service tax.

Analysis:
The petitioner sought a refund of service tax wrongly paid, but received a communication from the Assistant Commissioner Service Tax I, Div.III, Mumbai, which the petitioner contended was not a reasoned order on the refund application. The respondent argued that the communication was in line with the law and did not entitle the petitioner to a detailed hearing on the refund claim.

The court deliberated on whether the communication could be considered an order under the law. It was determined that the Competent Authority was required to conduct a quasi-judicial exercise, hear the petitioner, evaluate the claim on its merits, and issue a reasoned order accordingly. Since this process was not followed, the court held that the communication at "Annexure C" could not be upheld and was therefore quashed.

As a result of the judgment, the petitioner was directed to appear before the Competent Authority, who would then review the refund application, hear the petitioner, and issue a reasoned order in compliance with the law. The Competent Authority was instructed not to be influenced by the previous communication dated 11.6.2012. All arguments regarding the merits of the refund application were left open for consideration.

Ultimately, the Writ Petition was allowed in favor of the petitioner, with no costs imposed.