LI Network
Published on: December 1, 2023 at 13:00 IST
The Bombay High Court has issued an order directing the department to refund the tax amount deposited by HSBC under protest.
The bench, comprising Justice G. S. Kulkarni and Justice Jitendra Jain, emphasized that once the petitioner deposited the amounts and the department retained them without legal authority, the petitioner’s claim for a refund could not be denied.
The petitioner, HSBC, contested the department’s actions in retaining Rs. 56,19,84,075, asserting that it was done without legal authority, and no tax was payable by the petitioner.
The amount was deposited by HSBC under protest to preempt any potential demand for service tax and interest on “interchange income.”
The court noted that no show cause notice regarding “interchange income” was issued to the petitioner from October 2007 to June 2012.
HSBC argued that the department’s retention of the amounts lacked legal authority. The deposited amount was paid under protest, and the department had no justification to withhold the funds, violating the provisions of Article 265 of the Constitution of India.
The court emphasized that the amounts were enjoyed by the department for almost 11 years without issuing a show cause notice or taking any legal steps to appropriate the funds.
Consequently, the court held that the department had retained the amounts without legal authority and ordered their refund to HSBC, along with interest.
Case Title: The Hongkong and Shanghai Banking Corporation vs. UOI
