Part of sanctioned refund amount cannot be adjusted towards disputed interest liability of assessee

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[2020] 119 taxmann.com 108 (Karnataka)

HIGH COURT OF KARNATAKA

DPK Engineers (P.) Ltd.

v.

Union of India

KRISHNA S. DIXIT, J.

WRIT PETITION NO. 40904 OF 2018

FEBRUARY  11, 2020 

 

Section 54 of the Central Goods and Services Tax Act, 2017, read with rule 92 of the Central Goods and Services Tax Rules, 2017/Section 54 of the Karnataka Goods and Services Tax Act, 2017, read with rule 92 of the Karnataka Goods and Services Tax Rules, 2017 – Refund – Tax – Competent Authority while passing refund sanction order in FORM GST RFD-06 adjusted part of sanctioned refund amount towards disputed interest liability of assessee – Assessee filed a writ petition against the unilateral appropriation of a part of the refundable amount – It contended that appropriation of money being a mode of recovery of dues under GST Act could not have been done sans notice to the assessee – Whether part of the impugned order which appropriated a portion of refundable amount deserved to be set at naught – Held, yes – Whether matter required to be remitted to Competent Authority for consideration afresh – Held, yes [Para 3] [In favor of assessee]

(NR)

 

Raghavendra B. Hanjer, Adv. for the Appellant. Jeevan J. Neeralgi and C. Shashikantha, Adv. for the Respondent.

 

ORDER

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1. The short grievance of the petitioner/assessee is against the unilateral appropriation of a part of refundable amount in terms of the impugned FORM-GST-RFD-06 dated 13-6-2018 a copy whereof is at Annexure-A, to the arguable dues of other Assessment Year/s.

2.Learned Asst. Solicitor General of India, Shri C Shashikantha, on request having accepted notice for the respondents resists the writ petition making a submission in justification of the impugned order.

3.Having heard the learned counsel for the parties and having perused the petition papers, this Court grants limited reprieve to the petitioner because:

(a) there is a force in the contention of the petitioner’s counsel that the appropriation of money being a mode of recovery of dues under the Central Goods & Services Act, 2017, could not have been done sans notice to the Assessee, the contra contention of the counsel for the Revenue militating against the principles of natural justice; therefore, a unilateral decision as to appropriation ought not to have been made;
(b) there is also force in the contention of the counsel for the Assessee that the respondents being statutory authorities, need to practice fairness while dealing with a citizen and that, the unilateral recovery by way of appropriation falls short of fairness standards which the respondents are expected to maintain; and,
(c) the contention of the learned counsel for the Revenue that the Act vests the power in the respondents to take measures for recovery of tax, interest & the penalties that have fallen due does not come to the rescue of the Revenue; existence of power is one thing and its exercise is another; the existence per se does not justify the exercise; no case is made out for excluding an opportunity of hearing to the Assessee before making the impugned order.

In the above circumstances, this writ petition succeeds in part; that part of the impugned which appropriated a portion of refundable amount having been set at naught, the other part has been left intact; matter is remitted to the answering respondent for consideration afresh after hearing the petitioner or his agent, within a period of eight weeks.

It is open to the respondents to solicit any information or documents from the petitioner as are necessary for the fresh consideration of the matter; however, in the guise of such solicitation delay shall not be brooked.

It hardly needs to be stated that the answering respondent shall inform the petitioner the result of consideration pursuant to the remand, failure whereof shall be viewed seriously.

 

 

 

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