M/S Lajpat Rai Channa vs. State Of Haryana And Ors.

Held

The High Court disposed of all three writ petitions as infructuous. This decision was based on an order dated July 11, 2019, passed by the Assistant Commissioner, Goods and Service Tax Division, Hisar. This order sanctioned the total amount deducted by HBH and deposited with the Tax Authorities, amounting to ₹19,48,553 in CWP No. 4385 of 2018, in favour of the petitioner-firm. This sanction was in full and final settlement of the claim, as per the Court's earlier order dated May 30, 2019. While the Court noted that the petitioner might have a right to claim interest, it declined to entertain this plea in writ jurisdiction, considering the balance of equities, the peculiar circumstances, and the "graceful approach" of the Tax Authorities in not strictly adhering to statutory provisions. The ratio decidendi is that where a refund claim has been sanctioned and settled in full, even if not strictly in accordance with all procedural requirements, the writ court may not interfere, especially when the outcome is equitable.

Facts

Three writ petitions were filed by M/s. Lajpat Rai Channa, Suresh Kumar Gupta, and M/s. Sharavan Kumar Gupta against the State of Haryana and others, including the Housing Board, Haryana (HBH). The petitioners, contractors with HBH, sought a mandamus for the refund of service tax deducted at source from their bills and deposited with tax authorities. HBH had deducted service tax on construction of EWS flats, citing an exemption notification that applied from July 1, 2012. The petitioners' prior refund applications were rejected by the adjudicating authority and Commissioner Appeals, who noted a lack of proof that the tax burden was not passed on to consumers. The High Court, in an earlier order, directed HBH to apply for a refund, which was later modified to allow the petitioner-contractors to file the refund application directly.

Key Issues

1. Whether the petitioners are entitled to a refund of service tax deducted at source by the Housing Board, Haryana, on contracts for the construction of EWS flats, in light of the exemption notification dated June 20, 2012, and subsequent court pronouncements? Petitioner's contention: The petitioners argued that based on a prior Division Bench judgment of this Court in M/s. Bharat Bushan Gupta & Company Versus State of Haryana and others (dated 11.08.2016), they were not liable to pay service tax on the construction of EWS flats from July 1, 2012, onwards. They sought the refund of service tax deducted and deposited by HBH. Revenue/State's contention: The respondents, including HBH and the Union of India, initially rejected refund claims, citing a lack of proof that the tax burden was not passed on. However, subsequent proceedings involved directions for the Housing Board and then the petitioner to file refund applications, indicating a procedural evolution rather than a direct dispute on the taxability itself at this stage.