2019 (12) TMI 891 - HC - Service Tax

Refund of service tax incorrectly paid - rented premises being used for agriculture purpose was exempt from payment of Service Tax - refund was rejected on the ground of time limitation - HELD THAT - It emerged that wrongly paid Service Tax could only be refunded to FCI upon showing that the burden was not passed on to the consumer i.e. Department of Food and Supplies; and that HAFED would have to release the withheld amount equal to the service tax element incorrectly paid with the Tax Authorities. Accordingly, Mr.Sourabh Goyal, Counsel for the Revenue was directed to work out the mechanism for refund of aforesaid amount from one government institution to the other. Simultaneously while directing FCI/HAFED to bring the withheld lease amount, the matter was adjourned to 24.9.2019. Revenue has produced a copy of letter dated 13.12.2019 written by Assistant Commissioner, Govt. of India, Ministry of Finance, Department of Revenue and addressed to Deputy Commissioner (Law) CGST Commissionerate, Rohtak stating therein that in terms of the order dated 24.9.2019 passed by this Court, refund claim submitted by the FCI was examined and thereafter cheque No.651380 dated 13.12.2019 amounting to ₹ 2,58,19,711/- favouring FCI,Hisar was handed over to the representative of FCI Hisar. The petitioner concedes that in terms of the order dated 24.9.2019 passed by this Court, petitioner-landlord has been paid due amount by HAFED, which was released by the competent authority through FCI to the tenant- HAFED - petition disposed off as infructuous.

Summary

Issues:
1. Claim for refund of wrongly paid Service Tax.
2. Payment of lease money to the petitioner.
3. Resolution of the matter through court intervention.

Analysis:
1. The judgment involved two writ petitions with similar parties, issues, and relief claimed. The petitioner, a partnership firm, owned a Godown rented to HAFED for storing foodgrains. HAFED deducted Service Tax while tendering rent, which was later found exempt for agricultural use. The petitioner deposited the tax and sought a refund, which was denied due to limitation. During the hearing, it was established that the wrongly paid Service Tax could only be refunded to FCI if the burden was not passed on to consumers. The court directed the Revenue Counsel to facilitate the refund mechanism between government institutions.

2. The counsel for Revenue assured that if FCI applied for a refund and proved the burden was not passed on, the claim would be decided within two months. Regarding the payment of lease money to the petitioner, FCI/HAFED committed to pay before the next hearing. The court clarified that no party would be entitled to interest on the due amounts. Eventually, the Revenue Counsel presented a letter confirming the refund amount handed over to FCI Hisar. The petitioner's counsel acknowledged receiving the due amount from HAFED through FCI.

3. Based on the updates provided during the hearings, all parties agreed that the writ petition had become infructuous due to the resolution achieved through court intervention. Consequently, the petition was disposed of as infructuous, indicating that the matter no longer required further adjudication.