Virtusa Consulting Services Private Limited. V. Deputy Commissioner of Central Tax

WP/34109/2023

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The case involves Virtusa Consulting Services Private Limited, which filed a writ petition against the Deputy Commissioner of Central Tax, Gachibowli Division, seeking the quashing of show cause notices and the issuance of refunds for unutilized service tax credits over several periods from 2009 to 2013. The petitioner had previously been denied these refunds by the respondent authorities, but the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) had ruled in favor of the petitioner. Despite this, the respondent authorities did not process the refunds, leading to the current writ petition. The court found that the respondent's requirement for a fresh application for refund was unnecessary and directed the immediate processing of the existing applications.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 727618 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 19-12-2023
• Assessment Year: misc
• Other Referred Cases: J.P. Morgan Services India Pvt. Ltd. Vs. Union of India and others
• Laws Referred To: Article 226 of the Constitution of India, Central Excise Act, 1944
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DOMINIC FERNANDES
• Assessee Lawyers: CHALLA GUNARANJAN
• Keywords: Central Excise Act; Refund of service tax; Show cause notice; Writ of Certiorari; Writ of Mandamus
• Section: 151; 11B; 118

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE NINETEENTH DAY OF DECEMBER TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 34109 OF 2023 [ 337e ] ...PETITIONER Between: AND Virtusa Consulting Services Private Limited., Sy.No.11SlParl, Plot No. 10, Nanakramguda Village, Serilingampally Mandal, Hyderabad, Telangana, 500008 Rep. by its Authorized Representative Saurabh Chokhra, S/o. Pawan Kumar Chokhrb, ttrlanager Finance, Aged about 31 years, R/o. 503, Sai's Suraksha, Mayuri Nagar, tt/iyapur Hyderabad, Telangana - 500049 Deputv Commissioner of Central Tax, Gachibowli Division, Ranga Reddy Cohmissionerate, 4\"' Floor, Serene Heights, Humayun Nagar, [Masab Tank, Hyderabad- 500028, Telangana ...RESPONDENTS Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or direction, more particularly in the nature of \"Writ of Certiorari and [r,4andamus\" declaring and directing the Respondents to (i )lssue a writ of and/or order and or directions in the nature of certiorart or any other appropriate writ, order or direction quashing impugned show cause notices dated 1311112023 and the proceedings initiated pursuant thereto (ii.)Directing the Respondent to grant/issue refunds of Rs.1,59,269/-for July to September' 2009, Rs.2,73,1791- for January to l r1arch, 2010, Rs 1,76,6541- for April to June, 2010, Rs.3,01 ,2911- for January to [t4arch, 2012 and Rs 99,733/- for April to June, 2013, along with up to date interest within a rea so na ble/specif ied time f rame (iii. ) For such further and other reliefs, including costs of this Petrtion, as this Hon'ble Court may deem fit and proper in the nature and crrcumstances of the case (iv.) Award the costs of this Writ Petition rn favour of the Petittoner an,l against Respondents. lA NO:2 OF 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay the operation of the impugned show cause notices dated 1311112023 issued by the Respondent and stay the proceedings thereof in the rnterest of justice. Counsel for the Petitioner: SRI CHALLA GUNARANJAN Counsel for the Respondent: DOMINIC FERNANDES (senior standing counsel for CBIC) The Court made the following: ORDER THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION No.341O9 OF 2023 ORDER ftter ttot'ble. Sn Justice P.SAM KOSHY) Present is a Writ Petition lvhich has been hled seeking for issuarce of Writ of Certiorari, hrstly, for quashment of the impugned shorv cause notice, dated 13. 71.2023 issued by the respondent and al the same time aiso to issue a Writ of Maldamus directing the respondent to immediately grant refund of Rs.1,59,2691- for the period July to September, 2009; Rs.2,73,1799 I for the period January to March, 2010; Rs.1,76,654/- for the period April to June, 2OlO; Rs.3,01,29 1/ for the period January to March, 2Ol2 and Rs.99,733/- for the period April to June, 2013. 2. It is a case r'r'here the petitioner had initially sought for refund of credit of service ta-x paid on the input ser-vices that remained un-utilized. The petitioner had moved a claim application in this regard rvithin the stipulated period for the aforementioned periods. The said applications stood rejected 2 PSIT,J & IfIR,J W.P.No.34109 oJ 2023 by the respon dent uide orders, dated 10.03.201 1, 0S.O4.201 1, 27.06.2017, 24.O3.2013 and 02.OZ.2OI3, respectively. Subsequently, the petitioner preferred an appeal before the Commissioner (Appeals). The Commissioner (Appeals) ulde its orders, dated 28.O7 .2011, 2S.OB.2O 1 ancl 16.O2.2013 rejected the appeals of the petitioner. Aggrieved bv the same, the petitioner again preferred an appeal before the Customs, Excise & Service Tax Appellate Tribunal. South Zonal bench, Bangalore (for short ,,the Tribunal,,) and the same stood allor,ved uide separate orders, dated 24.O2.2O2O, 03.O7 .2017 and 24 .1.O .2O 16 . The Tribunal allolvecl the applications holding that the petitioner is entitled for the refund of the service tax paid on the input services that remained un- utilized. Though the Tribunal passed the orders on the aforementioned dates, the respondent - authorities, till date, has not allowed the petitioner to avail the benefits of refund. 3. On a query being put to the lear-ned counsel lor the Department, it is submitted that the respondent _ authorities PSK,J & NTR,J W.P.No.347O9 of 2023 are of the vielv that now r'r'hen the matter has stood decided by the Tribunal, the petitioner u'ould have to move a fresh application for refund of setwice tax under Section 1 18 of the Central Excise Act, 1,944 (for short \"the Act\"). The contention of the learned counsel for the Department is that under Clause (ec) of Section 1 18 ol the Act provides explanation to Section 1 1B, r'r'hich is the requirement of larv that there has to be separate application afresh to be made by the petitioner seeking for the refund and unless there is a fresh application made, the respondent - authorities ma]'not be in a position to actually process the claim of the petitioner. 4. Whereas, the stand of the petitioner undisputedly in terms of Section I iB(1), the petitioner in fact has made the application for refund r,r'hich is not in dispute by the respondent - authorities as rve11. In the event of the Tribunal allorving the appeals preferred by the petitioner, there is no requirement for fresh proceedings to be drawn up and the initial applications made for refund by the petitioner lr'hich on 4 PSK,J& JuIR,J W.P.No.347O9 of 2023 earlier occasion stood rejected by the respondent - authorities u'hich have nor,r' been set-aside bv the Tribunal, u'ould automaticall_ ' or as a consequence ['ould get restored or acti re again to be considered and processed 5, Learned counsel for the petitioner in this regard referred to a decision of the Division Bench of the Bomba,r. High Court in the case of J.P. Morgan Seruices Ind.ia Pttt. Ltd. Vs. Union of Ind.ia and othersl, decided on 17.O8.2022 under similar set of facts, in paragraph Nos.12 to 15, held as under: \" 72. This Court in Karanja Tertninal & Logistic hrt. Ltd. V/s. Principdl Commission er oJ Income Tax & Ors. lollouing the judgment of the Ape_x Court :.n Union oJ Ind.ia qnd Ors. V/s. Kamlakshi Finance Corporation Ltd, lnas held that it is of urmosr importance that in disposing of the quasi-judicial issues belore them, revenue ofhcers are bound bl the decisions of the appellate authorities. The order o[ CESTAT and the Commissioner (Appeals) is binding on respondent no.3. The principles of judicial discipline require that the orders of the higher appellate authorities should be follorved unreservedll' by the subordinate authorities. The mere fact that the order o[ the appellate aulhority was not acceptable to the department in itself u,ould be an objectionable phrase and is the subject matter of an appeal can furnish no ground for not follorving it unless its operation has been suspended by a competent court. The Apex Court 1 2022 VI!- 58.+,BOM-ST J PSI(,J& MTR,J W.P.No.341O9 oJ 2023 has held that il this healthy rule is not followed, the result rvill only be undue harassment to asscssees and chaos in administration of tax laws. 13. Therefore, as there is no stay granted to the orders passed by CESTAT in the onl1' appeal filed by petitioncr and no appeal has been flled challenging thtr order datecl Sth January 2016 of the Tribunal grantinEl refund of Rs- 1,29,60,00O l- for September 2OO4 Lo June 2005 and no appeal having been filed against the 1O refund orders passed by the Commissioner (Appeals), respondcnt no.3 is obliged and bound to follorv unreservedly the refund ordcrs passed by CtrSTAT as rvell as the Commissioner (Appeals). We agree r.vith petitioner's case that Explanation B (ec) of Section 118 is not at all applicable to the facts of the present case. II is not applicable in cases s'here refund claims have been Illed rvithin time and having been rejected. This Explanation comes into plal only u'hen the tax demand is set aside giving rise lo a refund. 14. In the circumstances, lve hereby allow this petition artd make the Rule absolute in terms of prayer clauses (a), (b) and (c), u'hich read as under: (a) that this Honourable Couft be pleased Lo [ssue o tuit of Cefiiorai or a uril in the noture of r-eniorai catling for the papers pertaining to this matter ond ctJler going into the uolidity thereof to quash and set aside the impugned Shoru Causes dated 22.12.2021 (Exhibit -E1 ctnd E2 hereto). (b) that this Honourable Court be pleased ro issue a u,,it of mandamus or a wit in the nature of mandamus or any other appropiate wit order or direct[on ordeing and directing the respondertts to forlhtuith tuithdratu the impugned Shotu Cause Notices dated 22. 12.2021 (Exhiblt El and E2 hereto). (c) that this Honourable Courl be pLeased to [ssue rt wnt of mandamus or a tuit it the nature of rnandctmus or ar,g other appropiate tuit order or I -- 6 PSK,J& ] [rR,J W.P.No.347O9 oJ 2O23 dtrection ordeing and directing the respondents to forthwith sQnction the refund amounts alonguith the appucable itterest tLlereon uncier Sect[on l jBB of the said Act a\"fter tlrc expiry of three months from lhp dLtI\"