HC of Karnataka slaps a fine of Rs 1 lakh on Commissioner of Service Tax

The High Court recently imposed an ‘exemplary cost’ of Rs 1 lakh on the Commissioner of Service Tax (Appeals) Suresh Kumar, which he has to pay “from his personal funds”. The fine came after what the HC termed was a “total callous, negligent and disrespectful behaviour shown by the Departmental authorities in this Court”.

The Department had failed to follow a tax Tribunal order to refund tax to a company. Instead, it went on to reject the Tribunal order and even defended this move before the High Court. The court called the officer ‘a threat to the society’.

The XL Health Corporation India Private Limited approached the High Court against the action of the Service Tax department. The Commissioner on an appeal in 2017 reiterated his stand of 2016 rejecting the refund of tax to the company. The company claimed refund on account of export of services rendered by it. The Customs Excise & Service Tax Appellate Tribunal (CESTAT) had set aside the 2016 order of the Commissioner and ruled in favour of the company. It had directed the Commissioner to quantify the tax amount to be returned.

When the company filed an appeal seeking return of tax for 2017 before the Commissioner, he rejected it again. He took note of the 2016 matter in which the Tribunal had set aside his order and said, “I have discussed the issue in detail (which order was set aside by the Tribunal) and do not find any reason to change my mind or findings therof and so see no reason or justification to set aside the Order in Original.” The Tribunal’s order of 2016 was not challenged by the Service Tax department either in the HC or SC. But it made the same kind of order for 2017.

When the issue was challenged by the company in the HC, “The Department has the audacity to file a statement of objection” saying “there were no new facts which necessitated going through the rigmarole or formality of hearing and is nothing but time wasting tactics being adopted by the petitioner.”

The HC in its judgement passed strictures against the Department saying it had thrown the principles of judicial discipline to the wind. The Commissioner “not only reiterated his own stand, which were set aside by the Tribunal but the same is sought to be defended by the Department.

The total callous, negligent and disrespectful behaviour shown by the Department authorities in this Court should not be tolerated at all. It is this kind of lack of judicial discipline which if it goes unpunished, will lead to more litigation and chaos and such public servants are a threat to the society.”

The HC had during an earlier hearing of the case given time to the Joint Commissioner of Central Tax, Prashant Kumar Jha, to file an affidavit apologising for its move. But no affidavit was filed and the order of Suresh Kumar was also not withdrawn. The counsel for the Department told the court that Jha was transferred from Bengaluru to Delhi and so more time was needed to file the affidavit.

“This request adds insult to the injury. The writ petition therefore deserves to be allowed with exemplary costs,” the court said. Suresh Kumar was ordered to pay the fine before November 21, 2018. #casansaar (Source - Banglore Mirror)