Bombay HC directs GST Dept to Refund Tax Deposited by HSBC Bank under Protest [Read Order]

The Bombay High Court directed the GST Department to refund tax deposited by HSBC Bank under protest.

The challenge as raised in this petition is in regard to an amount of Rs.56,19,84,075/- being retained by the respondents, which is contended by the petitioner to be without any authority in law and not a tax as leviable or payable by the petitioner, the Hongkong and Shanghai Banking Corporation.

The petitioner has contended that such amount was deposited by the petitioner with the respondents, to buy peace, in the event of any prospective demand towards service tax and interest on “interchange income”. It is not in dispute that such amount was deposited under protest. It is also the case of the petitioner that no show cause notice in respect of an ‘interchange income’ was issued to the petitioner for the period from October, 2007 to June, 2012.

The counsel for the petitioner submitted that the retention of the amounts in question by the respondent/revenue is without authority in law and that admittedly such amount was paid under protest. It is submitted that this has also not been disputed by the respondents. It was further submitted that once the said amounts were deposited under protest, there was no warrant for the department to retain the said amounts, as this would amount to violation of the provisions of Article 265 of the Constitution of India.

It was also submitted that from the date of deposit of the amounts, which was almost about 11 years back, the amounts are enjoyed by the respondents and no show cause notice being issued or any steps otherwise taken to appropriate the said amounts in the manner known to law, so as to consider such amounts to be any legitimate and lawful liability of the petitioner to pay service tax on interchange income.

A Division Bench of Justices Jitendra Jain and GS Kulkarni observed that “It is well settled that once such amounts were deposited by the petitioner and were retained by the department without the authority in law, the claim of the petitioner for refund could not have been denied. In such circumstances, it was appropriate for the petitioner to invoke the jurisdiction of this Court under Article 226 of the Constitution praying for writ for directing refund of money illegally retained / withheld.”

“It is limpid that the respondents have retained the amounts in question without authority in law. Such amounts are required to be refunded to be petitioner along with interest. In the light of the above discussion, the petition needs to succeed. It is accordingly allowed in terms of prayer clauses (a) and (b). Refund of the amount be granted to the petitioner as ordered along with applicable interest within a period of four weeks from the day a copy of this order is available to the parties” the Court concluded.

To Read the full text of the Order CLICK HERE

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