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Informist, Monday, Dec. 16, 2024

 

NEW DELHI – The Bombay High Court has pulled up the goods and services tax authorities for sitting over the refund applications or show-cause notices and not adjudicating upon the same. This, the court said, sends a wrong signal to the business community and foreign investors and works against efforts to promote 'Ease of Doing Business'.

 

"...we strongly deprecate the respondents' practice in not adjudicating upon the refund applications and the show-cause notice for years," said the bench of Justices Jitendra S. Jain and M. S. Sonak. "It is in the interest of the revenue (GST authorities) themselves to adjudicate the proceedings as early as possible, and if there is a delay and at the end of the day, any refund becomes eligible to an assessee, then huge amount of interest is also required to be paid, and the said interest would be paid from the tax offers of the citizens who contribute to the nation's exchequer." 

 

The high court said that early disposal of refund applications would save the state exchequer from paying interest. "...sitting over the refund applications and the show cause notice for years not only works against the interest of the revenue but also against our country's economic environment and image of our country in the international business arena, which is very competitive. We must make our country's image business-friendly with these steps," said the court.

 

Further, the high court directed the GST authorities to decide on the show-cause notice for recovering a service tax of INR 822.6 million from ICICI Bank Ltd. within eight weeks from its order issued Dec. 13. The respondents (GST authorities) are to process the refund applications of ICICI Bank for INR 3.33 billion within eight weeks from the order, according to the law laid down by the Supreme Court, the court said. If, on the adjudication of the show-cause notice and the refund applications, ICICI Bank is found to be eligible for any refund, then the same must be granted within two weeks, along with interest, it added.

 

ICICI Bank had moved the court seeking a direction against GST authorities for a refund of INR 3.33 billion deposit made "under protest" by it for the period between April 2007 and June 2017 with respect to service tax liability on "interchange fees". Further, ICICI Bank sought quashing of the show-cause notice issued by the respondents seeking recovery of service tax amounting to INR 822.6 million on the interchange fees. The issue of service tax on interchange fees is no more "res integra" and therefore, no purpose would be served on adjudication of the show-cause notice, said the bank. In its order, the high court refused to quash the show-cause notice after noting that the bank had earlier already asked the GST authorities for adjudication of the notices. 

 

ICICI Bank, which is also engaged in issuing credit cards, had a difference of opinion with the GST authorities on whether the service tax is required to be paid on interchange fees earned by the issuing bank. The issue was discussed between the association of the bankers and respondents. Pending the resolution of the debate, ICICI Bank, from October 2012 to June 2017, made various payments under protest for 2007-2017 aggregating to INR 3.33 billion. In 2019, ICICI Bank made two applications for refund of the amount. However, the matter has not yet been decided. 

 

In 2015, a show-cause notice was issued by the GST authorities to ICICI Bank asking why the service tax of INR 822.6 million should not be demanded and recovered on interchange fees and why the said demand should not be adjusted against the amount paid under protest. Replying to the show-cause notice, ICICI Bank raised various contentions and prayed for a decision on the same since the non-adjudication of the show-cause notice and the refund applications was impacting its working capital requirements. However, the same has not been decided yet. 

 

On Monday, shares of ICICI Bank ended 0.1% higher at INR 1,346.10 on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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