9911796707
TMI Blog2012 (11) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... hort), the petitioner was required to deduct tax at source. The petitioner after grossing up the said payment of FRF 7,36,000 to the foreign company, calculated the requirement of tax to be deducted at source at FRF 1,84,000 at the rate of 20% on FRF 9,20,000. Accordingly, an amount of Rs. 11,69,395 equivalent to FRF 1,84,000 was deposited with the Government of India by way of tax deducted at source. 2.2 Ultimately upon completing the execution of the contract, it was found that considering the quantum of work done by the foreign company, such company was entitled to receive a sum of FRF 6,33,100 only. Accordingly, it was this revised amount of FRF 6,33,100 which was paid to the foreign company by the petitioner. A certificate of tax deducted at source for a sum of Rs. 8,00,238/- (FRF 1,26,620) was issued in favour of the said foreign company. 2.3 According to the petitioner, since the petitioner company had deposited a total sum of Rs. 11,69,395/- by way of TDS as against the tax which ultimately was found to be deductible of Rs. 8,00,238/-, a sum of Rs. 3,69,157/- (i.e. Rs. 11,69,395 - Rs. 8,00,238) was deposited in excess with the Government of India. The petitioner, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 8 and 9 of Circular No.790). Though excess tax was deducted at source, refund of same is not permissible to the person who is deducting the tax in view of specific prohibition in para-9 of Circular No.790 dtd. 20.4.2000. Therefore, your claim is to be treated as filed." 3. Facts are more or less not in dispute. The petitioner claims refund of excess tax deducted at source and deposited with the Government of India on the strength of a Circular No.769 dated 6.8.1998 issued by the C.B.D.T in which one of the categories where such refund could be considered, was that the tax deducted at source is found to be in excess of the tax deductible for any reason. 4. The respondents contend that such circular dated 6.8.1998 was subsequently superseded by a Circular No.790 dated 20.4.2000 in which above noted category was dropped. We shall take note of the provisions made in this circular at a slightly latter stage. However, to complete the recording of successive circulars issued by the C.B.D.T., we may notice that the Circular No.790 dated 20.4.2000 came to be superseded by a fresh Circular No.7/2007 dated 23.10.2007. In such latter circular, several categories were envisaged under whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were never supplied to the Department. It was only on 7.9.2000 that the petitioner supplied such documents by which time, the Board's circular dated 20.4.2000 was already issued. The case of the petitioner, therefore, was rightly rejected since the same did not fall in any of the categories specified in the circular dated 20.4.2000. 6.1 Counsel further submitted that the circular dated 20.4.2000 was only clarificatory in nature and that, therefore, must be held to apply to all pending cases. He further submitted that the petitioner's application for refund was never examined on merit. Several considerations including the question whether the foreign company had made a refund claim or not, and whether even if the petitioner was entitled to refund, such refund was to be adjusted towards other tax liability of the petitioner, were the questions not examined by the competent authority. 7. Having thus heard the learned counsel for the parties and having perused the documents on record, what emerges virtually as an undisputed position is that the petitioner deducted a tax of Rs.11,69,395/- pursuant to a contract entered into with the foreign company on the premise that a total payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund by the deductor as well as the foreign company. The circular also provided that such refund could be adjusted against the existing tax liability of the assessee. It is not in dispute that the case of the petitioner would fall under clause (i)(c) of the circular dated 6.8.1998; of course subject to other procedural safeguards provided in the circular. 11. Such circular dated 6.8.1999 came to be superseded by the circular dated 20.4.2000. In such subsequent circular, instances for refund of tax deducted in excess of the ultimate liability, were confined to only first two categories which found place in the previous circular dated 6.8.1998. In para 9 of the said circular dated 28.4.2000, it was clarified that the refund shall not be issued to the deductor of tax in cases referred to in clause (i) (c) of para 1 of the Circular No.769 dated 6.8.1998. 12. Thus, it emerges that the subsequent circular dated 20.4.2000 did not cover the case of the petitioner. As noted, it is equally undisputed that in the original circular dated 6.8.1999, the case of the petitioner was covered. 13. The Bombay High Court in case of BASF (India) Ltd. (supra) considered a very similar situation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner. More than six months passed before the application of the petitioner was even attended to. If later on the rule position changed by virtue of the subsequent circular issued by the Board, the petitioner can hardly be penalized by withholding the refund claim which was covered under the earlier circular dated 6.8.1998. A Division Bench of this Court, in an order dated 28.6.2011, of course, in different factual background, held that the Department could not process the application of the assessee after an indefinite period of time and apply rule position that may have changed in the meantime by virtue of change in circular. It was observed as under : "Question, however, is somewhat different. The Question is whether the respondents can collect higher charges as per the revised guidelines having not responded to the petitioner's request for nearly two years. Facts are undisputed. As already noted, on 20th June 2006, the petitioner wrote to the Department requesting for compounding of the offences and showing its willingness to pay compounding charges. First response to such request was made by the Department only on 20th March 2008 and thereafter on 8th August 2008. The Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable period of time is always a question of fact to be considered in the facts and circumstances of a given case. In the present case, we find that for nearly 20 months, the petitioner's application did not receive any response and further that there is no explanation for such delay coming forth from the respondents, the period consumed cannot be stated to be reasonable. Counsel for the Revenue also submitted that the prosecution was lodged way back in the year 1995 and the petitioner itself applied for compounding of offences in the year 2006. We do not find that this could be a ground on which the application could have been turned down. Guidelines nowhere prescribe a period within which after initiation of prosecution compounding can be requested. The inescapable conclusion, therefore, we arrive at is that the Department did not process the request of the petitioner for a long period of time without any explanation whatsoever. In the meantime, if the guidelines were amended, we are of the opinion that revised guidelines could not have been applied to the petitioner for levying compounding charges to process the request of the petitioner. This is not to suggest that other req ..... X X X X Extracts X X X X X X X X Extracts X X X X
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