2021 (10) TMI 314 - HC - Service Tax

Realization of service tax / GST by the Opposite Parties - seeking grant of refund - pro-rata reduction in the amount as there was lability to pay less amount - HELD THAT - It is seen that in similar circumstances GGS INFRASTRUCTURE PRIVATE LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE 2020 (12) TMI 914 - BOMBAY HIGH COURT has held that The amount of service tax dues having thus crystallized, the resolution plan says that the same would be settled at 5% of the principal dues adjudicated. The word used is adjudicated and not adjusted as sought to be read and applied by the respondent. Therefore, the amount that the petitioner would be required to pay is 5% of ₹ 7,02,20,725.00. A direction is issued to Opposite Party No.3 to calculate and refund to the Petitioner the excess service tax paid by it by acknowledging that the Petitioner is entitled to receive only 20.5% of the admitted claim amount which works out to ₹ 3,71,87,750/- - Petition allowed.

Summary

Issues:
Challenge to service tax/GST realization, Typographical error in prayers, Clarification by Opposite Parties 5 and 7, Payment clarification, Dispute with Opposite Party No.3, Insolvency & Bankruptcy Code proceedings, Supreme Court judgment impact, Calculation of refund for excess tax paid.

Analysis:
The petitioner challenged the realization of service tax/GST by the Opposite Parties and sought a refund based on the circumstances explained in the petition. A typographical error in prayers was clarified by the petitioner's counsel, specifying that the grievance was against Opposite Party No.3. Opposite Parties 5 and 7 clarified the payment details in their counter affidavit, offering to credit the admitted amount to the petitioner's account.

Regarding the dispute with Opposite Party No.3, the petitioner, a registered partnership firm, raised invoices for services rendered, with outstanding payments. The National Company Law Tribunal concluded the Corporate Insolvency Resolution Process, approving a resolution plan. An appeal and subsequent Supreme Court judgment determined the settlement amount for operational creditors, including the petitioner.

The petitioner claimed an excess tax refund due to the pro-rata reduction of liability following the Supreme Court decision. The Bombay High Court judgment in a similar case highlighted the binding nature of approved resolution plans on stakeholders, emphasizing the settlement terms for service tax dues. The High Court directed Opposite Party No.3 to calculate and refund the excess service tax paid by the petitioner, acknowledging the entitlement to a specific percentage of the admitted claim amount.

In conclusion, the High Court allowed the writ petition, instructing Opposite Party No.3 to refund the calculated excess service tax within a specified timeframe, aligning with the resolution plan terms. The judgment emphasized adherence to extant rules for the refund process, ensuring compliance with the legal framework governing the resolution of tax disputes in insolvency scenarios.