Allowed

M/S Rns Motors Private Limited v. Commissioner of Central Tax

Karnataka HC9 Nov 2023WP/2153/2023

Case brief

AI extract

What is this about?

The High Court held that a deposit made under protest in response to audit queries had the colour of a tax levy. The petitioners are directed to file an application under Section 11B of the Excise Act, with liberty granted and limitation waived.

What did the court decide?

Petitioner reserved liberty to file an application under Section 11B of the Excise Act. Respondent to consider it within four weeks.

M/S Rns Motors Private Limited Vs Commissioner of… — GST and Indirect Tax | Karnataka HC (2023)

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NC: 2023:KHC:40273 WP No. 2153 of 2023

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 9^TH DAY OF NOVEMBER, 2023 BEFORE

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THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 2153 OF 2023 (T-RES)

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BETWEEN:

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M/S RNS MOTORS PRIVATE LIMITED (FORMERLY M/S RNS MOTORS LTD) A COMPANY INCORPORATED UNDER COMPANIES ACT 1956 OFF NO 2275 TUMKUR ROAD GURGUNTEPALYA YESHWANTHPUR BENGALUR 560022 REPRESENTED BY ITS MANAGING DIRECTOR MR SUNIL R SHETTY.

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…PETITIONER

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(BY Smt. VEENA KAMATH.,ADVOCATE)

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AND:

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Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA

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COMMISSIONER OF CENTRAL TAX NORTH WEST COMMISSIONERATE II FLOOR, SOUTH WING BMTC BUS STAND COMPLEX SHIVAJINAGAR BENGALURU 560051.

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ASSISTANT COMMISSIONER(MG-5) AUDIT II COMMISSIONERATE JSS TOWERS 100 FEET RING ROAD BANASHANKARI III STAGE BENGALURU – 560 085.

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NC: 2023:KHC:40273 WP No. 2153 of 2023

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COMMISSIONER OF CENTRAL TAX(AUDIT) BENGALURU AUDIT II JSS TOWERS 100FT RING ROAD BANASHANKARI III STAGE BENGALURU 560085.

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…RESPONDENTS

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(BY SMT. PREETHA MAHADEVAN.,ADVOCATE)

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THIS WP IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO-DIRECT THE RESPONDENTS TO IMMEDIATELY REFUND THE PETITIONERS AMOUNT OF RS. 1,00,00,000/- PAID UNDER PROTEST AS PER REPRESENTATION DATED 30/03/2019 BEARING NO. RNSM/ACCT/ST/2019/03-04 AT ANNEXURE-B ALONG WITH INTEREST, BY ISSUING A WRIT OF MANDAMUS OR ANY OTHER ORDER IN THE NATURE OF A WRIT OF MANDAMUS.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The petitioner has filed this petition for direction to the respondents to immediately refund the amount of Rs.1,00,00,000/- deposited by the petitioner under protest as per the representation dated 30.03.2019 bearing No. RNSM/ ACCT/ ST/

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NC: 2023:KHC:40273 WP No. 2153 of 2023

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2019/ 03-04 [ Annexure – B ] along with interest. Ms. Veena Kamath, the learned counsel for the petitioner, and Ms. Preetha Mahadevan, the learned counsel for the respondents, are heard for final disposal of the petition.

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It is undisputed that the petitioner, responding to the audit queries vide the second respondent’s Communication dated 28.02.2019 for the period 2013-14 to 2017-18 [up to June 2017], has filed the response on 30.03.2019 contending that the service tax is not payable on consideration shown as “ incentives ” while also offering certain other explanation, and the petitioner, along with such response, has deposited, under protest, a total sum of Rs. 1,00,00,000/-. The third respondent thereafter has issued the Show Cause Notice dated 22.04.2019, but further proceedings pursuant thereto is put on hold with the proceedings registered under the ‘ Call Book ’ in terms of the instructions in the Circular

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NC: 2023:KHC:40273 WP No. 2153 of 2023

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dated 21.01.2016 because of the proceedings pending before the Customs, Excise and Service Tax Appellate Tribunal [ CESTAT ] on a similar issue. The petitioner’s prayer for direction to refund is in the light of these circumstances.

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Ms. Veena Kamath, the learned counsel for the petitioner, submits that the deposit of Rs. 1,00,00,000/-, which is under protect, cannot be a levy [tax] as contemplated under Article 265 of the Constitution of India, and that if the deposit is not a levy [tax], the petitioner is entitled to refund thereof especially when it cannot be disputed that the deposit is under protest. Ms. Preetha Mahadevan does not contest that the petitioner will be entitled for a refund, but according to the learned counsel, the petitioner must necessarily file an application under Section 11B of the Central Excise Act, 1994 [ the Excise Act ], which, in providing for refund of deposits

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NC: 2023:KHC:40273 WP No. 2153 of 2023

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under protest, enables a person to claim refund upon an application being filed.

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Ms. Preetha Mahadevan submits, though

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it is contended by the petitioner that the voluntary deposit of Rs.1,00,00,000/- under protest cannot be treated as levy [tax], such deposit must be considered as having the colour of tax/levy as it is in response to the audit report which has resulted in a Show Cause Notice dated 22.04.2019 and as such an application must be filed under Section 11B[1]¹ of the Excise

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1 Section 11B - Claim for refund of duty and interest, if any, paid on such duty . -

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(1) Any person claiming refund of any [duty of excise and interest, if any, paid on such duty] may make an application for refund of such [duty and interest, if any, paid on such duty] to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of [duty of excise and interest, if any, paid on such duty] in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such [duty and interest, if any, paid on such duty] had not been passed on by him to any other person :

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NC: 2023:KHC:40273 WP No. 2153 of 2023

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Act. Ms. Preetha Mahadevan, allaying fears that if application is now filed it would be rejected on the question of limitation, submits that in view of the second proviso to Section 11B(1) of the Excise Act, an application for refund when the amount is paid under protest must be considered without reference to the contemplated limitation of one year.

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It is not disputed that the petitioner would be entitled for a refund, and the controversy is with the respondents asserting that refund cannot be permitted unless an application under Section 11B of the Excise Act is filed. As such, the question for consideration is:

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Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) substituted by that Act :

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Provided further that the limitation of one year shall not apply where any [duty and interest, if any, paid on such duty] has been paid under protest.

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NC: 2023:KHC:40273 WP No. 2153 of 2023

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Whether the petition must be disposed of with liberty to the petitioner to file an application under Section 11B of the Excise Act directing the second respondent to consider the same within a time frame, or to issue a positive direction to the second respondent to allow refund without such application.

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It is undisputed that the audit has resulted in a show cause notice dated 22.04.2019, and this Court must observe that it will be reasonable and just to opine that the petitioner would not have deposited the amount of Rs.1,00,00,000/unless audit queries were raised resulting in Show Cause Notice. These circumstances would be crucial and do impart the deposit of Rs.1,00,00,000/-, even if it is under protest, the colour of a tax/levy. The embargo in law would be against a levy without the authority of law, but when the deposit of Rs.1,00,00,000/- has the colour of levy and the

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NC: 2023:KHC:40273 WP No. 2153 of 2023

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provisions of the Excise Act contemplate refund of the duty deposited under protest, this Court cannot opine that there must be refund outside the procedure contemplated in law. The question for consideration is answered accordingly. Further, as stated by Ms. Preetha Mahadevan, the second proviso to Section 11B [1] of the Excise Act stipulate that the limitation of one year will not apply when the claim relates to a deposit under protest, and this must inure to the petitioner’s advantage. Of course, this Court must also observe that the provisions envisage refund of duty and interest. Hence, the petition stands disposed of by the following:

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ORDER

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The petitioner is reserved liberty to file an application under Section 11[5] of the Excise Act as early as possible upon receipt of a certified copy of this order, and the second respondent shall within four [4] weeks from the date of receipt of such application consider the same in the light of the

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NC: 2023:KHC:40273 WP No. 2153 of 2023

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stand taken before this Court that the petitioner’s claim for refund cannot be contested and limitation

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could not be a ground to reject the application.

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Sd/JUDGE

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M/S Rns Motors Private Limited v. Commissioner of Central Tax

Case brief

What is this about?

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M/S Rns Motors Private Limited v. Commissioner of Central Tax

Case brief

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