SUDHA RAMACHANDRAN Vs. UNION OF INDIA

JUDGEMENT

(1.) CHALLENGE in this writ petition is against Exts. P3 & P5 orders through which the 3rd respondent had rejected claim of the petitioner for refund of service tax paid. The petitioner got herself registered as a service provider with respect to rental income derived by her by letting out of commercial buildings. By virtue of decision of the High Court of Delhi, in 'Home Solution Retail India Ltd. v. Union of India - : 2009 (237) E.L.T. 209 (Del.) : 2009 (14) S.T.R. 433 (Del.), it is held that levy of service tax on renting out of immovable properties is ultra vires of Finance Act, 1994 as amended, and is therefore illegal.

(2.) IN view of the above decision the petitioner claimed refund of service tax already paid. The claim for refund was made under Section 11B of the Central Excise Act, 1944, which has been made applicable to service tax matters by virtue of Section 83 of the Finance Act, 1994 as amended. The refund application was returned as per Ext. P3 letter observing that the decision of the Delhi High Court, cited above, is under challenge in appeal filed by the Department, before the Hon'ble Supreme Court. Through Ext.P4 the petitioner pointed out that when an application for refund under Section 11B is preferred, the authority concerned is bound to adjudicate and pass speaking order on such claim for refund. It is pointed out that there is no provision for return of refund application. Ext.P4 notice was further replied by the 3rd respondent, through Ext. P5, pointing out that the Hon'ble Supreme Court has already admitted the appeal filed against the decision of Delhi High Court and since the issue involved is a subject matter pending consideration before the Hon'ble Supreme Court, the 3rd respondent is not in a position to adjudicate upon eligibility of the petitioner. Hence the refund application was returned once again.

(3.) HAVING considered rival submissions, I am of the opinion that the return of refund application cannot be treated in any manner as a disposal of the said application under law. It is pointed out by the petitioner that there is no enabling provision so as to return any such claim. The authority concerned has got a duty to consider the application and to pass orders thereon. If the respondent is of the opinion that the question regarding liability of the petitioner for payment of tax is yet to be decided, it is for the authority to reject such claim on that basis. Or on the other hand the authority can also keep adjudication and disposal of the claim for refund pending, till final decision is arrived on the matter, for adopting such a course, the apprehension expressed by the respondent is regarding liability for payment of interest. It is noticed that as per Section 11(B)(B) interest is payable only on amounts which is ordered to be refunded, within a period of three months from the date of application onwards. Therefore the question of payment of refund will arise only if the application is allowed and an order is passed. In view of the above provision the apprehension expressed by the respondent in keeping the refund application pending, does not survive.