Karnataka HC slaps Commissioner of Service Tax with 1 lakh costs for “callous, negligent behaviour”

The Karnataka High Court recently came down heavily on the Commissioner of Service Tax (Appeals), Bengaluru, imposing costs of Rs 1 lakh on him for lack of judicial discipline..The Bench of Justice Vineet Kothari passed an order to this effect while hearing a petition filed by XL Health Corporation, which had challenged an order passed by Suresh Kumar, the Commissioner in question..XL Health Corporation had approached the High Court assailing the June 2017 order, by which Kumar refused refund of unutilized CENVAT credit of input services on the ground of unjust enrichment. This order was set aside by the Customs Excise and Service Tax Appellate Tribunal (CESTAT), which had noted that the Commissioner had wrongly invoked the doctrine of unjust enrichment with respect to the petitioner company..However, the Commissioner decided to reiterate his stance taken in the previous order, even though the same had been reversed by the CESTAT, Bengaluru. The order passed by him states,.“I have discussed the issue in detail in OIA…dated 01.02.2016 (which order was set aside by the Tribunal) and do not find any reason to change my mind or findings thereof and therefore see no reason or justification to set aside the Order in Original.”.This, the High Court determined, amounted to a “total breach of judicial discipline”. Moreover, Justice Kothari took note of the Commissioner’s “audacity” in filing a Statement of Objections in the High Court stating,.“there were no new facts which necessitated going through the rigmarole or formality of hearing and is nothing but time wasting tactics being adopted by the petitioner.”.Taking a dim view of the Commissioner’s attitude, the Court noted,.“The total callous, negligent and disrespectful behaviour shown by the Departmental authorities in this Court should not be tolerated at all. It is this kind of lack of judicial discipline which if it goes unpunished, will lead to more litigation and chaos and such public servants are actually a threat to the society.”.It was ultimately held that the impugned order flies in the face of the CESTAT order and therefore cannot be sustained. The Court went on to impose exemplary costs of Rs. 1 lakh on Kumar, from his personal funds..The Court also granted leave to the petitioner to approach the Commissioner with a fresh request for the refund in question. The concerned officer has been directed to grant the refund after verifying the facts, within three months..The petitioner company was represented by a team from PDS Legal headed by Partner Tarun Gulati, along with Director Sparsh Bhargava and Senior Associate Vinayak Mathur, in collaboration with Keystone Partners..Read the order: