Santhosh Eappen Vs Joint Commissioner of Central Tax And Central Excise (Kerala High Court)
Service Tax Refund of Company cannot can be appropriated towards outstanding dues of proprietary concern of Director: Kerala HC
In a very significant ruling Hon’ble Kerala High Court held that there was no illegality in the appropriation of the refund amounts by the department, towards the outstanding dues of the proprietary concern. Appellant being aggrieved by the fact that certain amounts that were refunded to him had been adjusted against service tax dues of a proprietary concern belonging to him. Appellant argued that certain amount that were pre-deposited on behalf of the company in which he is a director, were wrongly remitted by the appellant in his own name. On realizing the said mistake, he approached the department with prayer for refund. In the meanwhile, against a demand that had been raised against his proprietary concern, he had preferred an appeal before the First Appellate Authority and against the dismissal of that appeal a further appeal before the CESTAT. He also made pre-deposit of 7.5%/10% of the outstanding demand in that case as a condition for maintaining the appeal.
Single Judge dismissed the matter by holding that the liability of the proprietary concern was actually the liability of the appellant and in the absence of any provision in the Finance Act, 1994 requiring the issuance of any notice prior to adjusting refund amounts, the action of the department in appropriating the refund amounts against the outstanding dues of the proprietary concern could not be said to be illegal.
