The Bombay High Court in the case The Hongkong and Shanghai Banking Corporation Versus Union of India observed and has ordered the department to refund the tax deposited by HSBC under protest.
The bench comprising of Justice G. S. Kulkarni and Justice Jitendra Jain in the case observed and has stated that once the amounts is deposited by the petitioner and it is being retained by the department without the authority of law, the claim of the petitioner for refund could not have been denied. It was appropriate for the petitioner to invoke the jurisdiction under Article 226 of the Constitution of India, wherein it prayed for a writ for the refund of money illegally retained or withheld.
In the present case, the petitioner or assessee challenged the actions of the department or respondent with regards to the amount of Rs. 56,19,84,075, which was contended by the petitioner to be without any authority in law and that no tax is leviable or is to be payable by the petitioner.
It has been contended by the petitioner in the plea that the amount was being deposited by the petitioner with the respondents to buy peace in the event of any prospective demand towards the service tax and interest on the interchange income. Thus, the same being not in dispute that the amount was deposited under protest and no-show cause notice has been issued to the petitioner in respect of an ‘interchange income’ for the period from October 2007 to June 2012.
The petitioner in the plea contended that the retention of the amounts in question by the respondent or revenue is without authority under the law and the said amount was paid under the protest. Thus, once the amount was to be deposited under protest, there was no warrant for the department in order to retain the amounts, as it would amount to a violation of the provisions as stated under Article 265 of the Constitution of India and from the date of deposit of the amounts, which was almost 11 years ago, the amounts were enjoyed by the respondents, and no show cause notice was issued or any steps were otherwise taken to appropriate the amounts in the manner known to the law in order to consider the amounts to be any legitimate and the lawful liability of the petitioner to pay service tax on interchange income.
The court while considering the facts and circumstances of the case observed and made it very clear that the respondents in the case had retained the amounts in question without authority under the law and such amounts are required to be refunded to the petitioner along with interest.
The counsel, Advocate Abhishek A. Rastogi appeared for the petitioner.
The counsel, Advocate Deepak Sharma represented the respondent.