Allowed

Bharat Sanchar Nigam Ltd. v. the Principal Commissioner

Rajasthan HC23 Feb 2022CW/1081/2020

Case brief

AI extract

What is this about?

The High Court allowed the writ petition filed by BSNL to challenge orders adjusting its pre-deposit refunds against unadjudicated tax demands. The court held that since the Tribunal set aside the original order, the subordinate authority acted illegally by adjusting funds without seeking rectification or appeal.

What did the court decide?

Impugned orders set aside; adjustment of pre-deposit amounts quashed; direction to refund the said sum within four months.

Bharat Sanchar Nigam Ltd. Vs the Principal Commissioner — GST and Indirect Tax | Rajasthan HC (2022)

¶1

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

¶2

D.B. Civil Writ Petition No. 1081/2020

¶3

Bharat Sanchar Nigam Ltd., Chief General Manager Telecom - Rajasthan Circle- Through Chief Accounts Officer (F And C) Sardar Patel Marg, C-Scheme, Jaipur - 302008.

¶4

----Petitioner

¶5

Versus

¶6

The Principal Commissioner, Central Goods And Service Tax Commissionerate Commissionerate-Jaipur, Ncrb, Statue Circle, C-Scheme, Jaipur 302005.

¶7

Assistant Commissioner, Central Goods And Service Tax Commissionerate Central Excise Building, Sector 10, Vidyadhar Nagar, Jaipur 302023.

¶8

Secretary, Ministry Of Finance-Department Of RevenueGovernment Of India, North Block, New Delhi - 110 001.

¶9

----Respondents

¶10

For Petitioner(s) : Mr. Sanjeev Pandey For Respondent(s) : Mr. Siddharth Ranka

¶11

HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MR. JUSTICE SUDESH BANSAL

¶12

Order

¶13

23/02/2022

¶14

This petition is filed by the Bharat Sanchar Nigam Limited (BSNL) to challenge an order dated 03.06.2019 passed by the Assistant Commissioner, Central Goods and Service Tax Division. Operative portion of this order reads as under:-

¶15

“I hereby sanction refund amounting to Rs.11,49,852/- (Rupees eleven lakhs fourty nine thousand eight hundred and fifty two only) (Rs.9,12,066/- against the Pre-deposit amount and Rs.2,37,786/- against the interest of predeposit) to M/s Bharat Sanchar Nigam Limited, Opp. GPO, MI Road Jaipur-302001 under Section 11B of Central Excise Act, 1944. I also order to adjust the above said refund claim of

¶16

(2 of 8)

¶17

[CW-1081/2020]

¶18

Rs.11,49,852/- against Government dues pending for recovery which was confirmed vide OIO No. JAI-EXCUS-000-COM-30-15-16 dated 06.08.2015.”

¶19

Three more similar orders were passed by the said authority dated 31.01.2019, 22.07.2019 and 16.09.2019. The petitioner has challenged these orders also. This challenge arises in the following background.

¶20

The Commissioner, Central Excise Commissionerate as adjudicating authority had issued a show-cause notice to the petitioner on 20.10.2014 calling upon why:-

¶21

“(i) Service Tax amounting to Rs.13,05,49,937/[Rs.12,62,95,889 + 38,57,094 + 3,96,954] (including education cess) should not be recovered from them under Proviso to Section 73(1) of the Finance Act, 1994

¶22

(ii) Interest should not be recovered under Section 75 of the Finance Act, 1994 on the short/non payment of Service Tax.

¶23

(iii) Interest of Rs.179568/- should not be recovered under Section 75 of the Finance Act, 1994 on belated payment of Service Tax.

¶24

(iv)Penalty should not be imposed upon them in terms of the provisions of Section 76, 77 & 78 of the Finance Act, 1994 for contravention of the provisions of Section 67, 68 and 69 of the Finance Act, read with Rule 4 and 6 of the Service Tax Rules, 1994.”

¶25

The petitioner opposed the show-cause notice. The adjudicating authority passed the order in original on 06.08.2015, operative portion of which reads as under:-

¶26

(i) I confirm under section 73(2) of the Finance Act, 1994 service tax demand of Rs.12,62,95,889/(Rs. Twelve Crore Sixty Two Lacs Ninety Five Thousands Eight Hundred and Eighty Nine Only) + Rs.38,57,094/- (Rs. Thirty Eight Lacs Fifty Seven Thousands and Ninety Four only) +

¶27

(3 of 8)

¶28

[CW-1081/2020]

¶29

Rs.3,96,954/- (Rs. Three Lacs Ninety Six Thousands Nine Hundred Fifty Four Only) including Education Cess and Secondary & Higher Education Cess and order it to be recovered from M/s Executive Engineer (E), Bharat Sanchar Nigam Limited, 1^st Floor, new Admn, Building, Jhalana Dungri, Jaipur (Raj.) alongwith interest in terms of section 75 of the said Act.

¶30

(ii) I confirm the demand of interest of Rs.1,79,568/- (Rs. One Lacs Seventy Nine Thousands Five Hundred and Sixty Eight only) under Section 75 of the Finance Act, 1994 in respect of service tax late paid by M/s Executive Engineer (E), Bharat Sanchar Nigam Limited, 1^st Floor, New Admn, Building, Jhalana Dungri, Jaipur (Raj.) for the period from April 2011 to September 2013.

¶31

(iii) I impose under section 78(1) of the Finance Act, 1994 a penalty equal to service tax Rs.12,62,95,889/- (Rs. Twelve Crore Sixty Two Lacs Ninety Five Thousands Eight Hundred and Eighty Nine only) + Rs. 38,57,094/- (Rs. Thirty Eight Lacs Fifty Seven Thousands and Ninety Four Only) + Rs.3,96,954/- (Rs. Three Lacs Ninety Six Thousands Nine Hundred Fifty Four only) payable and outstanding during 2009-10 to 2013-14 upon M/s Executive Engineer (E), Bharat Sanchar Nigam Limited, 1^st Floor, New Admn, Building, Jhalana Dungri, Jaipur (Raj.). However, in terms of second and third proviso to section 78(1), if service tax of Rs.12,62,95,889/- (Rs. Twelve Crore Sixty Two Lacs Ninety Five Thousands Eight Hundred and Eighty Nine only) + Rs.38,57,094/(Rs. Thirty Eight Lacs Fifty Seven Thousands and Ninety Four Only) + Rs.3,96,954/- (Rs. Three Lacs Ninety Six Thousands Nine Hundred Fifty Four only) and interest thereon is paid within a period of thirty days of the date of receipt of this order, the penalty payable shall be twenty five percent of the service tax subject to the condition that the amount of such reduced penalty is also paid within the said period of thirty days.

¶32

(iv) I impose penalty of Rs.10,000/- under section 77(1) of the Finance Act, 1994 upon M/s Executive Engineer (E), Bharat Sanchar Nigam Limited, 1^st Floor, New Admn, Building, Jhalana Dungri, Jaipur (Raj.)”

¶33

The petitioner preferred appeal before the Customs, Excise and Service Tax Appellate Tribunal. This appeal was disposed by

¶34

(4 of 8)

¶35

[CW-1081/2020]

¶36

an order dated 11.09.2018. Relevant portion of this order reads as under:-

¶37

“10. Once no taxability is involved question of evasion of tax does not arise. The question for assessee to suppress or mis-represent the fact with the intent to evade tax also retains no relevant. Resultantly the department was not entitled to invoke the extended period of limitation. Show cause notice is thereof held to be time barred. Resultantly, we opine, that commissioner has wrongly imposed the penalty, while adjudicating a time barred show cause notice.

¶38

We accordingly set aside the order under challenge and allow the appeal.”

¶39

Thus by an appellate order, the Tribunal had set aside the order in original passed by the Commissioner. Despite this, when the petitioner applied for refund of a sum of Rs.98,04,713/deposited by way of pre-deposit to file appeal before the Tribunal, the Deputy Commissioner issued a show-cause notice and proposed to adjust the refund against pending recovery of the Government confirmed vide order in original dated 06.08.2015 amounting to Rs.1,20,87,217/-. He passed the final order thereon on 31.01.2019, relevant portion of which reads as under:-

¶40

“In view of above, I find that the refund of predeposit of Rs.98,04,713/- is payable to the assessee. However I adjust confirm demand of Service Tax amounting to Rs.42,54,048/- and Penalty amounting to Rs.42,54,048/- and interest of Rs.12,96,617/- of OIO dated 07.08.2015 from the pre-deposit amount of Rs.98,04,713/-. However an interest amounting to Rs.22,82,504/- of OIO dated 07.08.2015 remains recoverable despite adjusting the entire pre-deposit amount of Rs.98,04,713/-

¶41

In view of above, I pass the following order:-

¶42

ORDER

¶43

I hereby sanction refund amounting to Rs.98,04,713/- (Rupees ninety eight lakhs four

¶44

(5 of 8)

¶45

[CW-1081/2020]

¶46

thousand seven hundred and thirteen only) to M/s Bharat Sanchar Nigam Limited, Trunk Room, First Floor, TAX Building, PGMTD, Campus, M.I. Road, Jaipur-302001 under Section 11B of Central Excise Act, 1944. I also order to adjust the above said refund claim of Rs.98,04,713/against Government dues pending for recovery which was confirmed vide OIO No.JAI-EXCUS000-COM-30-15-16 dated 06.08.2015 amounting to Rs.1,20,87,217/-.”

¶47

Learned counsel for the petitioner submitted that the CESTAT has set aside the entire order in original. Thereafter there was no scope for the adjudicating authority to withhold any part of predeposit amount.

¶48

On the other hand, learned counsel Mr. Siddharth Ranka appearing for the department submitted that the petitioner had not challenged before the CESTAT two parts of demand of Rs.38,57,094/- and Rs . 38,69,054/- in the appeal that was filed before the Tribunal. Such order of the adjudicating authority qua these amounts therefore became final. The pre-deposit made by the petitioner had to be adjusted towards such confirmed demand. Deputy Commissioner has therefore committed no error in passing the impugned orders. He pointed out that since against the demand of the department of Rs. 1,20,87,217/-, the pre-deposit came to only 98,04,713/-, the authority has passed further orders adjusting the refund of the petitioner to the extent of deficit.

¶49

Certain important documents to enable us to come to correct conclusions were not on record. At our request learned counsel for the department has produced on record copy of the reply filed by the petitioner to show-cause notice issued by the adjudicating authority and the appeal memo filed by the petitioner to challenge the order of adjudication. These documents are taken on record.

¶50

(6 of 8)

¶51

[CW-1081/2020]

¶52

From the materials on record what emerges is that in the show-cause notice there were three different independent tax demands. One was for a sum of Rs.12,62,95,889/- for providing services to use towers by the petitioner. Second one was Rs.38,57,094/- on account of discrepancy in the taxable value shown in the ST-3 return vis-a-vis financial records and third was of Rs.3,96,954/- under reverse charge mechanism in respect of goods contract services from 01.07.2012 onwards. The petitioner had filed a detailed reply to the show-cause notice however in the entire reply only opposition was made to the proposed recovery of Rs.12,62,95,889/-. In other words with respect to the other two heads of Rs.38,57,094/- and Rs.3,96,954/- there was no ground to oppose such demands. This reply to the show-cause notice is quite elaborate which we have perused with the assistance of learned counsel for the parties and thereby come to this conclusion. In the appeal memo against the order of adjudication, averments have been made opposing both these recoveries in specific terms. However in the grounds in such appeal memo no specific grounds are included. All grounds only concern the opposition to the confirmation of demand of Rs.12,62,95,889/The prayer clause in the appeal memo is also specific and reads as under:-

¶53

“set aside the impugned order dated 06.08.2015 passed by the Ld. Commissioner wrongly ordering for recovery Service Tax demand of Rs.126295889/along with interest of Rs.179568, together with penalty of Rs.126295889/- and Rs.10,000/-; and”

¶54

Despite such facts, the Tribunal by the judgment dated 11.09.2018 has set aside the entire order in original and thus

¶55

(7 of 8)

¶56

[CW-1081/2020]

¶57

allowed the appeal as can be seen from the portion of this judgment reproduced hereinabove.

¶58

In view of such facts, in our opinion the Deputy Commissioner Service Tax could not have on his own interpreted the judgment of the Tribunal as being limited to striking down the demand of Rs.12,62,95,889/-. Learned counsel for the revenue however vehemently contended that when there was no opposition to other demands in the reply filed to the show-cause notice and when the appeal of the assessee was also confined only to the tax demand of Rs.12,62,95,889/-, the judgment of the Tribunal must be seen in light of such facts. He may be right in pointing out that the assessee had not filed any grounds opposing these demands in the reply to the show-cause notice and the prayer in the appeal memo is also limited to challenging the principal demand of Rs.12,62,95,889/-. However it is not open for the subordinate authority to interpret the judgment of the superior Tribunal and bestow unto himself the powers to adjust the predeposit amount by coming to the conclusion that the order setting aside the order in original must be given limited effect. We are conscious that even in the judgment the Tribunal has not discussed any aspect of striking down the other two demands of Rs.38,57,094/- and Rs.3,96,954/-. Even in such circumstances it was the duty of the Deputy Commissioner to approach the Tribunal and seek rectification of the order. The other clear option was to challenge the same and have the offending portion of the judgment set aside by the High Court. Without resorting to either of these two remedies he could not have adjusted the pre-deposit amounts as he has done in the present case. He was thus labouring under a wrong belief and perhaps bonafide to protect

¶59

(8 of 8)

¶60

[CW-1081/2020]

¶61

interest of the revenue has passed the order which is challenged before us. His intention however would not be sufficient to save the order from the vice of illegality. He may if so advised challenge the judgment of the Tribunal even now before the High Court if he could make out good grounds for condonation of delay.

¶62

Under the circumstances subject to above observations petition is allowed. Impugned orders are set aside. The adjustment of the pre-deposit amounts of the petitioner made by the Deputy Commissioner is quashed. The department shall refund the said sum within a period of four months from today. This would of-course be subject to right of the department to file the appeal against the judgment of the Tribunal and if such appeal is allowed surely it would be open for the department to raise the demand of all such taxes from the petitioner. All pending applications are also disposed of.

¶63

(SUDESH BANSAL),J

¶64

(AKIL KURESHI),CJ

¶65

BRIJ MOHAN GANDHI/S-87

Bharat Sanchar Nigam Ltd. v. the Principal Commissioner

Case brief

What is this about?

What did the court decide?

Bharat Sanchar Nigam Ltd. v. the Principal Commissioner

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Om Prakash Bairwa Son of Shri Dhanna Lal Bairwa Vs Vinod Kumar Rajoria Son of Shri Phool Chand

Paras Kumar Jain Son of Shanti Lal Vs State of Rajasthan

Navsarthak Foundation Vs the State of Rajasthan

Smt Madhumala W/O Shri Deepak Udaiwal Vs Smt. Nitika Udaiwal Wife of Shri Sanjay Udaiwal

M/S Videon Tv Manufacturers Private Limited Vs State of Rajasthan

Diksha Trivedi D/O Shri Arun Kumar Trivedi Vs Registrar (Examination)