Facts of the Case

The petitioner, Navrang Infrastructures Inc., was a proprietorship concern stated to be engaged in construction activities.

The petitioner had constructed flats for the Haryana Housing Board. According to the petitioner, the Housing Board deducted certain amounts from the running bills payable to the petitioner and deposited those amounts with the respondent department towards service tax.

The petitioner filed the writ petition seeking a writ of mandamus directing the respondents to release an amount of ₹8,70,418/- which had been deposited by the Haryana Housing Board on behalf of the petitioner towards service tax.

The petitioner asserted that it, along with certain other contractors, had earlier approached the High Court by filing different writ petitions. According to the petitioner, a view had been taken that no service tax was payable on contracts for construction of BPL houses. On that basis, the petitioner claimed that the amount deducted by the Housing Board and deposited with the department as service tax was liable to be refunded.

The petitioner had already submitted representations/claim petitions before the competent authority and sought an expeditious decision on those claims.

Issues Involved

The principal issues arising from the proceedings were:

  1. Whether the petitioner was entitled to release/refund of ₹8,70,418/- deposited by the Haryana Housing Board on its behalf towards service tax.
  2. Whether service tax was payable on the contract involving construction of BPL houses.
  3. Whether the amount deducted from the petitioner’s running bills and deposited with the department as service tax was liable to be refunded in view of the petitioner’s reliance on the position allegedly taken in earlier writ proceedings involving similar contractors.
  4. Whether the competent authority should be directed to decide the petitioner’s pending representation/claim expeditiously.
  5. Whether the High Court, in exercise of writ jurisdiction under Article 226 of the Constitution of India, could issue a direction requiring the competent authority to consider and decide the pending representation in accordance with law.

Petitioner’s Arguments

The petitioner contended that:

  • It was engaged in construction activities and had constructed flats for the Haryana Housing Board.
  • The Haryana Housing Board had deducted amounts from the petitioner’s running bills and deposited the same with the respondent department towards service tax.
  • A total amount of ₹8,70,418/- had been deposited on behalf of the petitioner towards service tax.
  • The petitioner, along with certain other contractors, had approached the High Court through different writ petitions.
  • According to the petitioner, a view had been taken that no service tax was payable on contracts for construction of BPL houses.
  • Consequently, the amount deducted by the Housing Board and deposited with the department as service tax was liable to be refunded.
  • The petitioner had already filed representations/claim petitions before the competent authority.
  • The petitioner would be satisfied if the writ petition was disposed of by directing the competent authority to take an expeditious decision on the pending representation/claim.

Respondents’ Arguments

The judgment does not record any detailed substantive counter-arguments on behalf of the respondents.

The order specifically records the submissions advanced by counsel for the petitioner and proceeds to consider the limited request that the competent authority be directed to decide the pending representation.

Accordingly, no detailed finding regarding any specific defence of the respondent department was recorded in the order.

Court Order / Findings

The High Court found the petitioner’s limited request for an expeditious decision on the pending representation to be just and reasonable.

The Court disposed of the writ petition with a direction to the Commissioner, Central Goods & Service Tax, GST Bhawan, Gurugram, Haryana, to:

  • look into the matter against the backdrop of the petitioner’s representation dated 21.07.2022 (Annexure P-9); and
  • take a final decision on the representation in accordance with law within a period of two months from the date of receipt of a certified copy of the order.

Significantly, the Court issued this direction without ascertaining the correctness of the averments made in the writ petition.

Thus, the High Court did not directly order refund of ₹8,70,418/-. Instead, it directed the competent authority to examine the petitioner’s representation and take a final decision in accordance with law within the stipulated period of two months.

Important Clarification

The High Court expressly clarified that it had not examined the petitioner’s claim on merits.

This clarification is legally significant because:

  • the order cannot be treated as a final adjudication that the petitioner was entitled to refund;
  • the Court did not conclusively determine that no service tax was payable on the construction of BPL houses in the petitioner’s specific case;
  • the Court did not independently verify or accept the correctness of the factual averments made in the writ petition;
  • the Commissioner, CGST, remained required to examine the representation and take a final decision in accordance with law; and
  • the direction was essentially for time-bound administrative consideration of the petitioner’s pending claim.

 Link to download the order - https://mytaxexpert.co.in/uploads/1783160687_887compressed.pdf

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