Full Text
HIGH COURT OF DELHI
Date of Decision: 31.05.2023
INCREDIBLE UNIQUE BUILDCON PRIVATE LIMITED..... Petitioner
Through: Mr Prakul Khurana and Ms Vrinda Lakhotia, Advocates.
Through: Mr Abhishek Maratha, Sr. Standing Counsel with Mr Akshat Singh, Jr.
Standing Counsel.
HON'BLE MR JUSTICE GIRISH KATHPALIA [Physical Hearing/Hybrid Hearing (as per request)]
RAJIV SHAKDHER, J.: (ORAL)
JUDGMENT
1. Allowed, subject to just exceptions.
2. Issue notice.
3. Mr Abhishek Maratha, learned senior standing counsel, who appears on behalf of the respondent/revenue, accepts notice.
4. Mr Maratha cannot but accept that the issue raised in the present writ petition is covered by the judgment of this court dated 17.02.2023, passed in WP(C) 6610/2019, titled Sanjay Sudan v. The Assistant Commissioner of Income Tax & Anr. 4.[1] In this context, Mr Maratha says that a counter-affidavit is not required to be filed, as the instant writ petition concerns a pure question of law.
5. Broadly the facts obtaining the case are as follows:
6. This writ petition concerns Financial Year (FY) 2010-11[Assessment Year (AY) 2011-12].
7. The petitioner had, as it appears, provided services to an entity going by the name Clutch Auto Ltd. (CAL). The value of the service provided amounted to Rs.8,50,26,199/-. The said entity, i.e., CAL, deducted tax at source amounting to Rs.24,96,199/-. It is the petitioner’s stand that the tax at source deducted by CAL was not completely deposited with the respondent/revenue.
8. The petitioner also claims that the balance amount, after deducting tax at source, was also not remitted to it by CAL. Insofar as this aspect is concerned, the petitioner claims that it is an issue which is being agitated before the concerned bench of the National Company Law Tribunal (NCLT).
9. We may note that according to the petitioner, CAL only deposited Rs.69,897/- towards tax deducted at source, resulting in a deficit of Rs.24,26,302/-. This aspect is not disputed by the respondent/revenue. 9.[1] Therefore, the grievance of the petitioner is that it has not been given credit for the tax deducted at source by CAL, which was not deposited with the respondent/revenue.
10. The petitioner thus avers that instead of being granted credit for the tax deducted at source by CAL, a demand amounting to Rs.15,24,840/- was raised against it.
11. In these circumstances, the petitioner has approached this court with the following substantive prayer: “a) Issue writ in the nature of mandamus or any other appropriate writ/ order/ direction to the effect directing the Respondent to issue the refund amounting to Rs. 11,39,870 I- due to the Petitioner for AY 2011-12”
12. This very issue, as indicated above, arose for consideration in Sanjay Sudan’s case. It would, therefore, be appropriate to set forth the relevant paragraphs of the said judgment:
9. The question, therefore, which comes to fore, is as to whether the respondents/revenue can do indirectly what they cannot do directly. 9.[1] The adjustment of demand against future refund amounts to an indirect recovery of tax, which is barred under Section 205 of the Act. 9.[2] The fact that the instruction merely provides that no coercive measure will be taken against the assessee, in our view, falls short of what is put in place by the legislature via Section 205 of the Act.
10. Therefore, in our view, the petitioner is right inasmuch as neither can the demand qua the tax withheld by the deductor/employer be recovered from him, nor can the same amount be adjusted against the future refund, if any, payable to him.
11. Thus, for the foregoing reasons, we are inclined to quash the notice dated 28.02.2018, and also hold that the respondents/revenue are not entitled in law to adjust the demand raised for AY 2012-13 against any other AY. It is ordered accordingly.
12. Notably, in paragraph 7 of the writ petition, the petitioner has adverted to the fact that he is entitled to refund of Rs.1,94,410/- in respect of AY 2015-16. 12.[1] Mr Sanjay Kumar, learned Senior Standing Counsel, who appears for the respondent/revenue says the amount claimed towards refund is not in dispute. 12.[2] Given this position, the petitioner’s claim which is not in dispute will have to be refunded. 12.[3] It is so directed.
13. The writ petition is disposed of in the aforesaid terms.”
13. Clearly, what follows is that while respondent/revenue cannot recover the deficit tax at source from the petitioner, which was deducted and pocketed by CAL, and they cannot also refuse to grant credit for the same. The rationale being what the appellant/revenue cannot do directly, it is impermissible for it to reach the same end indirectly.
14. Given this position, the prayer made in the writ petition is allowed.
15. The respondent/revenue will refund Rs.11,39,870/- to the petitioner, as prayed.
16. The writ petition is disposed of in the aforesaid terms.
RAJIV SHAKDHER, J GIRISH KATHPALIA, J MAY 31, 2023 / tr