2019 (7) TMI 1355 - HC - Service Tax

Refund of Service tax with compound interest - unjust enrichment - incidence of tax not passed on - HELD THAT - It appears that without first approaching the Customs, Excise and Service Tax Appellate Tribunal, the petitioner straightway filed the present writ petition seeking quashing of the orders and a mandamus for refund of the service tax deposited by the Housing Board - It is apparent that as a measure of equity, The HBH was permitted to make an application for refund of service tax to be ultimately disbursed to the petitioner(s)-firm(s), in case it was found that the incidence had not been passed on. At the time of resumed hearing today, counsel for the petitioner(s) states that an order dated 11.07.2019 has been passed by the Assistant Commissioner, Goods and Service Tax Division, Hisar, whereby the total amount deducted i.e. ₹ 19,48,553/- by The HBH and deposited with the Tax Authorities stands sanctioned in favour the petitioner-firm towards full and final settlement of the claim as per the aforesaid order dated 30.05.2019 passed by this Court. Although the petitioner may have a right to raise the issue of award of interest, however, we are not inclined to entertain such a plea in writ jurisdiction keeping in view the balance of equities and the peculiar circumstances of this case, as also the graceful approach of the Tax Authorities in not adhering to strict compliance of the statutory provisions. Petitions are disposed of as infructuous .

Summary

Issues involved:
Seeking Mandamus for refund of service tax with compound interest, rejection of refund application, filing of writ petition without approaching the Tribunal, modification of the order directing the Housing Board to claim refund, final settlement of the claim, and the plea for interest.

Analysis:
The judgment by the High Court of Punjab and Haryana addressed three writ petitions seeking a Mandamus for the refund of service tax deducted by the Housing Board, Haryana from the bills of the petitioner-contractor. The court noted that a previous judgment had clarified that contractors were not liable to pay service tax for construction projects under a specific exemption notification. Despite the rejection of the refund application by the tax authorities, the petitioners directly filed writ petitions without approaching the Tribunal, leading to the current proceedings.

The court initially directed the Housing Board to file a refund application upon verification by the Union of India. Subsequently, the Union of India sought modification of the order, stating that it should be the contractor, not the Housing Board, to claim the refund. The court accepted this modification, requiring the contractor to file a fresh application for refund within three weeks, to be processed within a month by the authorities.

During the resumed hearing, it was revealed that the total amount deducted by the Housing Board had been sanctioned for refund to the petitioner-firm. The court, while acknowledging the petitioner's right to claim interest, declined to entertain the plea in writ jurisdiction due to the circumstances of the case and the cooperative approach of the Tax Authorities in settling the claim. Consequently, all petitions were disposed of as infructuous, bringing the matter to a close.