- Bookmark
- Share
- CaseIQ
Estate Officer, Grea... v. Gaurav Mutneja (S).
Concise Analytical Summary of the Opinion — Justice R. K. Agrawal, President
Factual and Procedural Background
The present proceedings are an Appeal Execution filed by the Judgment Debtors (Appellants) against the Order dated 04-04-2018 passed by the Punjab State Consumer Disputes Redressal Commission (State Commission) in Execution Application No. 102 of 2017. That Execution Application arose out of the State Commission's earlier order dated 10-03-2017 in Consumer Complaint No. 140 of 2016. The State Commission's order dated 04-04-2018 directed the Opposite Parties / Judgment Debtors to refund amounts they had deducted towards Service Tax and TDS to the Complainant / Decree Holder on or before 25-04-2018 by way of demand draft.
The Appellants filed the execution appeal with an eight-day delay; that delay was condoned by the court for the reasons stated in the condonation application. The court heard the learned counsel for the Appellants and the father of the Respondent (who appeared in person) and perused the impugned order of the State Commission.
Legal Issues Presented
- Whether the State Commission's direction to the Appellants/Judgment Debtors to refund amounts deducted as Service Tax and TDS to the Complainant/Decree Holder (as per the order dated 04-04-2018) was liable to be set aside.
- Whether the amounts deducted by the Appellants as Service Tax were properly payable to the revenue or were required to be refunded to the Complainant (including the effect of relevant Service Tax provisions and government circulars).
- Whether deduction of TDS by the Appellants from amounts awarded by the State Commission (characterised as "interest" in that order) was permissible under the Income Tax provisions (notably Section 194A and the definition in Section 2(28-A)), given the contention that such "interest" was actually compensation/damages.
- Whether the Appellants could raise jurisdictional and related pleas in execution proceedings after those pleas had been considered by the State Commission.
Arguments of the Parties
Appellants' Arguments
- The Appellants relied on prior orders of the National Consumer Disputes Redressal Commission (e.g., Sunrise Green Residents Welfare Association v. Jaipuria Infrastructure and Kuntal Debnath v. Director, RDB Industries Ltd.) to contend that the issue of refund of statutory dues (Service Tax and TDS) was settled and did not require refund by them.
- They argued that Service Tax was correctly charged and deposited in accordance with provisions of the Finance Act (referenced in the opinion as Section 65(105)(zzzh) and Section 66E of the Finance Act) and Circular No. 151/2/2012-ST (Ministry of Finance, dated 10-10-2012). The Appellants asserted that Service Tax had been deposited with the revenue department (on 24-11-2012) and that GMADA had decided on 23-06-2015 to deduct Service Tax from the refund amount (a decision not challenged).
- Regarding TDS, the Appellants submitted that they had deducted TDS only on the amount characterized as interest (and not on the compensation component) in accordance with Sections 194A and 2(28-A) of the Income Tax Act, and that the TDS so deducted was deposited with the revenue department (on 05-11-2015 for a specified period).
- The Appellants contended that the impugned order of 04-04-2018 was without jurisdiction and/or based on incorrect assumptions contrary to the State Commission's order dated 10-03-2017, and therefore the order directing refund of Service Tax and TDS should be set aside.
Respondent's Arguments (as presented by the Respondent's father)
- The Respondent asserted that the amount of Rs. 21,321 deducted as Service Tax and not refunded was unauthorized and must be refunded in view of the State Commission's order dated 10-03-2017 and the Execution Order dated 04-04-2018. The Respondent relied on Clause 2.3 (Investment Model) of Circular No.151/2/2012-ST dated 10-02-2012, contending there was no ambiguity about refund once the Respondent withdrew from the scheme.
- The Respondent argued that he was not a Service Tax assessee and therefore could not claim refund from the CBEC; only the Appellants could seek such refund from the revenue, but until then the deducted amount was repayable to the Respondent.
- On TDS, the Respondent maintained that the sums deducted by the Appellants (notably Rs.11,239 for 2015-16 and Rs.1,94,407 for 2017-18 as contested in the written arguments) were unauthorized because the "interest" awarded by the State Commission was compensatory in nature (damages for delay) and not "interest" as defined under Section 2(28-A) of the Income Tax Act; therefore Section 194A deduction was not applicable.
- The Respondent relied on precedents (including National Commission and Supreme Court authorities such as GDA v. Naresh Kumar Sharma and GDA v. Chander) advocating that TDS deducted on such awards should be refunded, sometimes with interest, and placed reliance on multiple Tribunal and High Court orders supportive of the claim for refund of TDS.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Sunrise Green Residents Welfare Association v. Jaipuria Infrastructure (Order dated 22-08-2016) | Relied upon by Appellants to contend that the issue of refund of statutory dues (Service Tax and TDS) had been finally decided in a manner favourable to their position (i.e., that refund was not required). | The Appellants relied on this order in support of their submissions; the court noted the reliance but ultimately found the Appellants' broader submissions misconceived and did not allow interference with the State Commission's order. |
| Kuntal Debnath v. Director, RDB Industries Ltd., 2016, SCC Online NCDRC 2045 (Order dated 12-08-2016) | Relied upon by Appellants as an authoritative order said to have attained finality on the refund question concerning Service Tax and TDS. | The Appellants cited this order; the court considered the reliance but upheld the State Commission's decision and dismissed the execution appeal. |
| G.D.A. v. Dr. N. K. Gupta (R.P. No.2244 of 1999; National Commission; observations from 18.09.2002 reproduced) | Holds that amounts awarded by way of damages, even if labelled "interest", are not "interest" as defined in Section 2(28-A) of the Income Tax Act; therefore provisions like Section 194-A for TDS are not applicable to such awards. | The court expressly placed reliance on this National Commission judgment and reproduced its key observation to support the conclusion that TDS deduction from compensatory awards is not permissible where the award is damages/compensation and not taxable interest. |
| Puma Realtors Pvt. Ltd. & Ors. v. Abha Arora & Ors., IV (2018) CPJ 441 (NC) | Observes that where simple interest is awarded by way of damages, the payer should not deduct tax (TDS) under the Income Tax Act because the award is a formula for computation of damages and not a payment of interest. | The court relied on this observation in support of the proposition that amounts labelled as interest but constituting damages should not be subject to TDS; the decision was cited by the Respondent and relied upon by the court in its reasoning. |
| GDA v. Naresh Kumar Sharma (Civil Appeal No. 8400 of 2000) and GDA v. Chander (Civil Appeal No. 7224 of 2002) — Supreme Court | Referenced by the Respondent as Supreme Court authorities that vindicated the stand of consumer/state fora ordering refund of TDS deducted, sometimes with interest (text references Supreme Court vindication of earlier positions). | The Respondent relied on these Supreme Court decisions; the court noted that the Respondent had placed reliance on them when arguing for refund of TDS. |
| Orders of Income Tax Appellate Tribunal / High Court / other tribunals (as cited in the opinion, incl. H.P. Housing Board, Shimla and Commissioner of Income Tax, Shimla—various dates) | Used by the Respondent to support the proposition that TDS deductions on compensatory awards were not proper and that refunds of TDS (with interest in some precedents) were due. | The opinion records that the Respondent placed reliance on several such tribunal and court orders; the court considered these authorities in the context of the competing submissions. |
Court's Reasoning and Analysis
The court proceeded in a stepwise manner:
- Delay: The court first addressed procedural regularity and condoned an eight-day delay in filing the execution appeal on the basis of the condonation application presented (as recorded in the opinion).
- Hearing and materials: The court heard learned counsel for the Appellants and the Respondent's father, and perused the impugned order of the State Commission (04-04-2018) and the antecedent order (10-03-2017).
- Analysis of submissions: The court examined written arguments on both sides. The Appellants re-asserted factual and legal contentions previously raised before the State Commission (relying on statutory provisions, government circulars, and certain NCDRC orders). The Respondent argued that the Service Tax deduction was unauthorized and that amounts characterized as "interest" in the State Commission's award were compensatory (damages) and therefore not subject to TDS under the Income Tax provisions.
- Precedent reliance: The court placed explicit reliance on National Commission jurisprudence (notably G.D.A. v. Dr. N. K. Gupta) and on the Puma Realtors line of decisions which observed that awards framed as 'interest' but constituting damages are not taxable interest for the purposes of TDS deductions. The reproduced paragraph from G.D.A. v. Dr. N. K. Gupta emphasizes that merely labelling damages as interest does not convert them into interest under Section 2(28-A) of the Income Tax Act; consequently, Section 194-A was held not to apply in that context.
- Assessment of appellants' plea: The court observed that the Appellants had raised the same pleas in the Execution Application before the State Commission and that those pleas were substantially considered by the State Commission. The court concluded that the Appellants' submissions in the execution appeal were "wholly misconceived" and essentially a repetition of arguments already considered and rejected by the State Commission.
- Collateral facts: The court noted that during the pendency of the Execution Application the Appellants had paid substantial sums to the Complainants (Rs. 17,20,638 on 23-08-2017 and Rs. 2,50,018 on 07-09-2017 by way of demand drafts) and that the State Commission had directed the Appellants to pay amounts deducted as Service Tax and TDS to the Complainants.
- Conclusion on interference: Given that the State Commission had addressed the issues and given the court's agreement with the State Commission's reasoning (including reliance on the cited consumer/tribunal authorities), the court found no grounds to interfere with the well-reasoned order of the State Commission and held that the Execution Proceedings were not the forum to rehearse the same jurisdictional/contention-based arguments.
Holding and Implications
Holding: The execution appeal preferred by the Appellants is DISMISSED.
Implications:
- Direct effect: The State Commission's order dated 04-04-2018 (directing refund of amounts deducted as Service Tax and TDS to the Complainant / Decree Holder) stands upheld by this court. The Appellants' challenge to the refund direction is rejected.
- On the merits of tax/TDS issues: The court relied on earlier National Commission and related tribunal observations that amounts awarded as damages — even if calculated by reference to a rate described as "interest" — are compensatory and not "interest" as defined under Section 2(28-A), and therefore may not attract TDS under Section 194-A. The court applied these principles in agreeing with the State Commission's order.
- Procedural consequence: The court refused to permit the Appellants to re-agitate the same pleas and jurisdictional contentions in execution proceedings after those pleas had been considered by the State Commission.
- Costs: There shall be no orders as to costs.
- Precedential effect: The court's decision affirms existing lines of authority relied upon in the opinion (as recorded) but does not purport to create any new legal precedent beyond applying and following those authorities and the State Commission's reasoning.
Note: This summary is strictly confined to the material and assertions contained in the provided opinion and does not add or infer facts or legal conclusions that are not expressly presented in that text.
Rendered by: Division Bench — R. K. Agrawal (President) and M. Shreesha (Member)
JUSTICE R. K. AGRAWAL, PRESIDENT
1. Delay of eight days in filing of this Appeal Execution is condoned for the reasons stated in the Application for Condonation of Delay.
2. The present Appeal Execution has been filed by the Judgment Debtors, who were Opposite Parties before the Punjab State Consumer Disputes Redressal Commission at Chandigarh (in short, the State Commission), against the Order dated 04-04-2018 passed by the State Commission in Execution Application No.102 of 2017, arising out of Order dated 10-03-2017 in Consumer Complaint No.140 of 2016, whereby the State Commission has directed the Opposite Parties/Judgment Debtors to refund the amount deducted by them towards Service Tax and TDS to the Complainant/Decree Holder on or before 25-04-2018 by way of demand draft.
3. We have heard the Learned Counsel for the Appellants and the father of the Respondent, who is appearing in person and perused the impugned order passed by the State Commission.
4. The Learned Counsel for the Appellants, in her written arguments, placing reliance on the order dated 22-08-2016 of the Honble National Commission in Consumer Complaint No.142 of 2009 titled Sunrise Green Residents Welfare Association Vs. Jaipuria Infrastructure and order dated 12-08-2016 of the Honble National Commission in the Developers Pvt. Ltd. matter of Kuntal Debnath Vs. Director, RDB Industries Ltd., 2016, SCC Online NCDRC 2045, which have attained finality, vehemently contended that the issue of refund of deposit of statutory dues towards Service Tax and TDS is no more and the impugned order has beenres integra passed in of the settled position of law; that the Respondent sought refund of theignoranitum amount deposited with the Appellants vide his letter dated 01-06-2015 in terms of Clause 3(II) of the Letter of Intent, which was granted in full in the month of August, 2015, after deduction of statutory dues pertaining to Service Tax and TDS; that the Service Tax has been charged and deposited in consonance with the provisions of Section 65(105)(zzzh) and Section 66E of the Finance Act; that in pursuance of the statutory law and Circular No.151/2/2012-ST dated 10-10-2012 issued by the Ministry of Finance, the Appellants had deposited the Service Tax with the concerned Revenue Department on 24-11-2012.
5. The Learned Counsel for the Appellants further submitted that the Central Government in its Budget of 2010-2011 had imposed tax liability (Service Tax) on all under construction properties w.e.f.01-07-2010. The same was challenged by many Real Estate Developers and Builders but the matter was eventually decided by the Honble Supreme Court in favour of the Government. Consequently, Service Tax on under construction property was liable to be paid @3.75% on the total price paid for the purchase of an under construction property by the Developers. In order to remove such confusion, the Government, while introducing the Negative List of Services (applicable from 1 July, 2012) has very specifically in the definition of Servicest contained in Clause 44 of Section 65B of the Act stated that Services include Declared Services. The Government also mentioned the activities like construction of complex, building, civil structure or part thereof as Declared Service. The learned counsel further submitted that a decision was taken by the Chief Administrator, Greater Mohali Area Development Authority (GMADA) on 23-06-2015, which was not challenged, to deduct the Service Tax from the amount of refund, since the same has been deposited by GMADA.
6. As part of her contentions, the learned counsel for the Appellants submitted that the Appellants have deducted TDS only on the amount of interest and not from the compensation, as awarded by the State Commission in consonance with provisions of Sections 194A and 2(28)A of the Income Tax Act, 1995 and deposited the same with the concerned Revenue Department on 05-11-2015 which was deposited for the period from 01-07-2015 to 30-09-2015 in the Assessment Year of 2016-2017. She further contended that the impugned order dated 04-04-2018 is jurisdiction and is based on assumptions contrary to the letter and spirit of the order datedsans 10-03-2017 passed in the Complaint and is liable to be set aside to the extent it directs refund of the Service Tax and TDS which is legitimately deducted by the Appellants.
7. To the contrary, the father of the Respondent, Mr. Viney Kumar Mutneja, in his written arguments, raised rival contentions that the amount of Rs.21,321/-, deducted on account of Service Tax by the Appellants and not refunded to the Respondent is unauthorized and is payable to the Respondent in view of the order dated 10-03-2017 quoting the statutory provisions of the Service Tax Laws, of the State Commission passed in the Complaint Case and order dated 04-04-2018 passed by the State Commission in Execution Application. The Respondent has also placed reliance on Clause 2.3, namely, Investment Model of Circular No.151/2/2012-ST dt.10-02-2012 of Government of India, Ministry of Finance, CBEC and contended that there is no ambiguity about the refund of the Service Tax by the Appellants since the Respondent has withdrawn from the Scheme. Moreover, the Respondent is not Service Tax Assessee and cannot claim refund from the CBEC and only the Appellants can take the refund.
8. The father of the Respondent further contended that the amount of tax deducted in the year 2015-16 of Rs.11,239/- and Rs.1,94,407/- deducted in the year 2017-18 is unauthorized and refundable by the Appellants because the interest which has been awarded by the Honble State Commission is not on account of any deposits made by the Respondent with the Appellants, but for compensation or damages for delay in construction of the flat or handing over the possession of the same causing consequential loss to the Respondent by way of escalation in the price of the property during the last five years and also on account of depriving of the use of money to which the Respondent is legitimately entitled. That the word interest has been used in the order of the State Commission as a convenient method of calculating the amount of compensation/damages and does not mean interest as defined in Section 2(28-A) of the Income Tax Act. That the Appellants are exempted from deduction of TDC under Section 194A of Income Tax Act, on interest payments in such cases since such interest payment does not come under the purview of Section 2(28-A) of the Income Tax Act. He has placed reliance on the judgment of the Honble National Commission in order dated R.P.No.2244 of 1999, G.D.A. Vs. Dr. N. K. Gupta, 28-11-2011 of High Court of Himachal Pradesh in Commissioner of Income Tax, Shimla Vs. , order dated 02-12-2015 of the Income Tax Appellate Tribunal in H.P. Housing Board, Shimla The father of the West Bengal Housing Infrastructure Vs. Department of Income Tax . Respondent has also emphasized that the Honble Supreme Court of India in Civil Appeals No.8400 of 2000, GDA Vs. Naresh Kumar Sharma and No.7224 of 2002, GDA Vs. Chander have vindicated the stand of the Honble National Commission and State Bhan Singh Commission and have ordered to GDA for refund of TDS deducted along with 18% rate of interest till the date of refund.
9. At this juncture, we would like to place reliance on the judgment of the National Commission in the case of GDAVs. Dr. N. K. Gupta, R.P.No.2244 of 1999 decided on the relevant observations made wherein are reproduced as hereunder: 18.09.2002,
..The amounts which were paid to the GDA by the Complainant were not paid by way of any deposit or GDA had not borrowed that money. ..Here interest payment is by way of damages. Merely describing the damages as by way of interest do not make them as interest under the Income Tax Act . ..The word interest used in the order of the State Commission is not what interest is as defined in Section 2 (28-A) of the Income Tax Act. .In our view, therefore, considering the definition of 'interest' as contained in Section 2 (28- A) of the Income Tax Act , provisions of Section 194-A were not applicable and the GDA was clearly wrong in deducting the TDS from the interest payable to the Complainant.
10. We further place reliance on the judgment of the National Commission in the bunch of cases titled as Puma Realtors Pvt. Ltd. &Ors. Vs. AbhaArora&Ors., IV (2018) CPJ 441 (NC), therelevant observation made wherein is reproduced as hereunder: We may mention here that even though the Complainants have been granted simple interest of 12% p.a. or 9% p.a. but as the same has been awarded by way of damages the Appellant who has been directed to pay the said amount shall not deduct tax (T.D.S.) under the Income Tax Act, 1961 as it is not payment of any interest but only a formula for computation of damages.
11. In our considered view, the submissions made by the Learned Counsel for the Appellants are wholly misconceived. The Appellants/Judgment Debtors, during the pendency of the Execution Application, have paid Rs.17,20,638/- to the Complainants on 23-08-2017 vide DD No.662680 and Rs.2,50,018/- on 07-09-2017 vide DD No.662684 and they have been directed to pay the amount deducted by them as Service Tax and TDS to the Complainants. On careful perusal of the impugned order passed by the State Commission, we find that the Learned Counsel for the Appellants have raised the same pleas which were raised before the State Commission in Execution Application and the same have been substantially considered by the State Commission while deciding the Execution Application vide order dated 04-04-2018. We are in complete agreement with the view taken and findings recorded by the State Commission and find no good ground to interfere with the well-reasoned order passed by the State Commission. The attempt of the Learned Counsel for the Appellants in again raising the same pleas as well as the question of jurisdiction, etc., cannot be permitted in the Execution Proceedings.
12. In the result, the Execution Appeal preferred by the Appellants is hereby dismissed.
13. There shall be no orders as to costs. ......................J R.K. AGRAWAL PRESIDENT ...................... M. SHREESHA MEMBER
Alert