2016 (3) TMI 1003 - HC - Service Tax

Seeking direction for refund and release of security deposit of ₹ 24,21,125/- - Amount of Service tax paid by Corporation on behalf of the petitioner - Petitioner under the contract appointed as sole agent for transportation of parcels to render other allied services and to operate courier services through the buses of the Corporation - Held that - even if the aspect is apart that the petitioner has challenged communication dated 30.09.2013 after unexplained gap of three years, there is no gainsaying from the facts and the outlines of the controversy recorded above that the dispute between the parties is in the realm of the contractual obligations flowing from the service contract given to the petitioner by the Corporation. Thus, it is in the arena where the writ jurisdiction would not be attracted. Going into the case of the petitioner and the grievance raised by him would necessarily involve adjudicating upon the contractual terms and conditions and the mutual obligation between the parties arising therefrom with reference to entitlement of the Corporation to claim the amount from the security deposit as well as its justifiability or otherwise of the claim of the petitioner to seek refund/release of the said amount. Jurisdiction under Article 226 is not the appropriate remedy to be invoked for the grievance and the dispute of the above nature which stem from contract between the parties. Therefore, this petition is not entertainable and it does not qualify for any relief. - Petition dismissed

Summary

Issues:
Petitioner seeking to set aside communication withholding security deposit refund. Dispute over service tax payment and refund entitlement under the contract.

Analysis:
The petitioner requested the court to overturn the respondent Corporation's communication withholding the security deposit refund of Rs. 24,21,125. The petitioner was appointed as the sole agent for transportation services under a contract from 2007-2010. The contract specified yearly amounts and monthly installments, with a security deposit of Rs. 47,50,517 to be paid within 60 days. The Corporation later claimed Rs. 76,41,753 from the petitioner, including Rs. 24,21,125 for service tax paid on behalf of the petitioner.

The petitioner contended that the Corporation wrongfully withheld the Rs. 24,21,125 service tax amount from the security deposit refund. The Corporation justified this action by stating that the service tax was unpaid by the petitioner, leading to the Corporation covering the amount. The petitioner challenged the communication after a three-year delay. The court noted that the dispute arose from contractual obligations and did not fall under writ jurisdiction. Adjudicating the matter would involve interpreting the contract terms, mutual obligations, and the validity of the refund claim.

The court held that the dispute was contractual in nature, not suitable for Article 226 jurisdiction. Consequently, the petition was summarily dismissed, with the petitioner advised to seek alternative legal remedies. The judgment emphasized that pursuing relief under the law was still open to the petitioner despite the dismissal of the petition.