Kishore Kumar vs. The Managing Director

The Captioned petition is filed seeking following reliefs:-

Issue a Writ of Mandamus or any other Writ/Direction/Order thereby directing the Respondent Bank to refund the amount of Training Cost of Rs.8,97,810.00 from the petitioner in contravention of agreement dated 31.01.2017 and direct the Respondents to refund the said amount of Rs.8,97,810.00 to the petitioner with interest at 10% per annum from the date of recovery till realization as per Annexure-A annexed to this writ petition." HC-KAR NC: 2025:KHC:22239

Heard learned counsel appearing for the petitioner, learned counsel appearing for respondents 1 and 2, so also learned counsel appearing for respondent No.3. 3. The petitioner is aggrieved by the action of respondents No.1 and 2 particularly the Bank in levying and recovering Goods and Services Tax (GST) on the amount recovered under a service bond and towards training costs for the notice period. The petitioner contends that such levy and recovery are not in consonance with the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the "CGST Act"). The petitioner had joined the services of respondent No.1/Bank on 01.08.2006 and, in terms of the service conditions, executed a service bond on 31.01.2017. Upon tendering resignation, the Bank accepted the same subject to recovery of the bond amount of Rs. 20,00,000/- and a further sum of Rs. 8,97,810/- towards training costs. HC-KAR NC: 2025:KHC:22239

The petitioner’s primary grievance is that the recovery of training costs, apart from being contrary to the CGST framework, is also in contravention of the terms of the agreement dated 31.01.2017. The said agreement, as per the petitioner, does not contemplate separate recovery of training expenses in the event of resignation prior to the completion of the bond period. Despite submission of a detailed representation dated 16.04.2022, requesting waiver of the training cost and refund of the GST amount collected, the Bank has allegedly rejected the same without adequate justification.

The petitioner places reliance on a Circular issued by the Tax Research Unit of the Ministry of Finance, Department of Revenue, Government of India, dated 03.08.2022 (Annexure-G), which clarifies that in cases where an employer recovers bond amounts or similar sums due to premature termination of service, such amounts do not attract GST, since the employee does not receive any supply of service in return. The petitioner further relies on HC-KAR NC: 2025:KHC:22239 a judgment rendered by the Hon’ble High Court of Kerala, which has addressed an identical legal issue and extended relief to the employee on similar grounds.

This Court finds merit in the petitioner’s contention that the agreement dated 31.01.2017 does not authorize the separate recovery of training costs in the event of resignation. Therefore, the action of respondent No.1 in recovering an amount of Rs. 8,97,810/- towards training costs appears arbitrary and unsupported by the express terms of the contract or any internal regulation of the Bank. Moreover, the inaction on the part of the GST adjudicating authority (respondent No.3) in considering the petitioner’s grievance despite the aforementioned Circular is unjustified.

In light of the submissions and material placed on record, this Court is of the view that the petitioner must be afforded an opportunity to make a fresh representation to respondent No.3, seeking refund of the GST component HC-KAR NC: 2025:KHC:22239 levied and recovered from him. Respondent No.3, in turn, shall be duty-bound to consider the same in the light of the Circular dated 03.08.2022 issued by the Government of India and the ratio laid down by the High Court of Kerala. The adjudicating authority shall conduct a reasoned and expeditious inquiry into the petitioner's claim and take an appropriate decision. ORDER (i) The writ petition is allowed. (ii) The petitioner is granted liberty to submit a fresh representation addressed to the competent authority/adjudicating authority (respondent No.3), seeking refund of the GST amount recovered from him, annexing the following documents: a. Certified copy of this order; b. The Circular dated 03.08.2022 issued by the Ministry of Finance, Department of Revenue (Annexure-G); HC-KAR NC: 2025:KHC:22239 c. The judgment rendered by the Hon’ble High Court of Kerala in support of the petitioner’s contention. (iii) Upon receipt of such representation, the adjudicating authority (respondent No.3) shall consider the same strictly in accordance with the Circular dated 03.08.2022 and in the light of the legal principles laid down by this Court and the Kerala High Court. The authority shall pass a reasoned and speaking order on the petitioner’s claim for refund of GST. (iv) This entire exercise shall be completed within a period of eight weeks from the date of receipt of a copy of this order along with the petitioner’s representation. (v) The petitioner is also granted liberty to submit a separate representation to respondent No.1/Bank, seeking refund of the training cost recovered, asserting that such recovery was not HC-KAR NC: 2025:KHC:22239 contemplated under the agreement dated 31.01.2017, nor supported by any Bank regulation or policy. Respondent No.1 shall consider such representation in accordance with law and take an appropriate decision thereon. (SACHIN SHANKAR MAGADUM) JUDGE