IN THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION,

       KOLLAM

                                             C.C.No. 19/2021

                                                                                                 PRESENT

SMT. S.K.SREELA, B.A.L, LL.B, PRESIDENT

      SMT. S.SANDHYA   RANI. BSC, LL.B, MEMBER

  SRI.  STANLY HAROLD, B.A.LL.B, MEMBER

                                                ORDER DATED:   14.08.2023

BETWEEN

1.    G.Johnregi, 45 years,

   Prince Thejus Villa,

   Lekshminada, NRA-21A, Kollam 691013.

2.    Mariamma Regi, 44 years,

   Prince Thejus Villa,

   Lekshminada, NRA-21A, Kollam 691013.

3.    M.Chinnamma, 74 years,

   Prince Thejus Villa,

   Lekshminada, NRA-21A, Kollam 691013.

4.    K.Y.George, 79 years,

    Prince Thejus Villa,

   Lekshminada, NRA-21A, Kollam 691013.                                            :           Complainants

AND

KSFE Bhadrath, Museum Road, P.B.No.510,

Thrissur 680020.                                                                                              :Opposite Party

(By Adv.Renjith Vijayan)

ORDER

Sri.Stanly Harold, B.A.LLB, Member

          This is a case based on a complaint filed U/s 35 of the Consumer Protection Act 2019.

The averments in the complaint in short are as follows:-

Complainants are the chitty subscribers of chitty No.88/12 held in Vadayattukotta Branch as Sri.G.Johnregi with Chittal No.18,21,24,27,30,33,36   Mariyamma Regi with chital No. 42,46, 48,51 and M.Chinnamma Chittal No.69 and 66 K.Y.George Chittal No.72 and 75.  The chitty subscribers paid chitty installment regularly up to 93 instalments out of the total of 100 instalments.  The chitty ends in December 2020.  The chitty subscribers were ordered refund of the service tax paid between 1^st July 2014 to 13^th May 2015 on the basis of the order in W.A Nos.474/2014 and 968/2014 dated 14.03.2018 of the Hon’ble High Court of Kerala.  The complainant followed the instruction of opposite party and applied for the refund to the central tax and excise of Kollam and thereafter on opposite party’s instruction gave a letter of authorization to opposite party to collect refund.  The complainants have not received the service tax as ordered by the Hon’ble High Court till date.  But received a letter from central excise stating that there was a duplication of request and the refund amount is given to the opposite party.  The complainant received a recovery notice for the 7 instalments with penal interest.  The complainants are willing to pay the 7 instalments after deducting the amount ordered by Hon’ble High Court with regard to the refund.

Since the refund of the service tax ordered by the High Court in                WA No.474/2014 and 968/2014 has not been refunded, KSFE is responsible for the same.  The act of the opposite party is a clear case of deficiency in service.  The complainant prays before the Hon’ble Commission to instruct opposite party not to take any recovery steps in Chitty 88/12 and claim penal interest for the pending 7 instalments until the refund ordered by the Hon’ble High Court is given to them.  Hence the complaint.

Opposite party filed version resisting the averments in the complaint and filed version.  Opposite party denies all the allegations alleged on them in the complaint other than those that are specifically admitted.  It is admitted by the opposite party that the complainants are the chitty subscribers of the opposite party, who defaulted the chitty instalments.  The opposite party further contends that the opposite party company is a Non-Banking Finance Company, fully owned by the Government of Kerala engaged in the business of Chit funds.  The complainants filed the subject complaint on a misunderstanding without acknowledging the complete facts.  It is further contended by the opposite party that the present refund has accrued for the reason  that the service tax mandated by the department, to be collected from 2012 to 2015.  The opposite party started to collect service tax from the customers and paid the same to the department, under protest.  It may also be noted that while collecting the said service tax, the opposite party had informed its customers that the same would be refunded by the department, in the event of favourable judgment.  The opposite party being fiduciary to its customers, collected the levy of service tax before various forums, consequently receiving a favourable judgment dated 14.03.2018 from the Hon’ble High Court of Kerala in WA.Nos.474/2014 & 968/2014(Common Judgment in W.A.273/2013 & Connected Cases).  In the aforesaid judgment, the subscribers were allowed to file the refund application towards the service tax paid on demand made by the authorities, within the stipulated limitation period.

The opposite party further contended that the opposite party with bonafide intentions instructed the complainants to apply for refund as there was no restriction on the individual subscribers for applying for service tax refund.  Later, the opposite party came to understand that the number of subscribers who had applied directly for the refund is substantially low.  Thereafter the opposite parties decided to collect the authorization  letters from its chitty subscribers and to file a branch wise consolidated refund application as the refund amounts to those that have not applied would lapse and be forwarded by the service tax department to the consolidated consumer fund of India as is statutory required.  The complainants were not provided with a copy of the High Court Order, as they were not parties to those cases.  The opposite party refutes the allegation made by the complainants that the “refund amount is given to the KSFE Welfare Fund”.  The same is not true.  It is clarified that the opposite party does not hold any “KSFE Welfare Fund” as averred by the complainants.  It is contended that the Department on considering the refund application filed by the opposite party, deposited the refund amount to the Consolidated Consumer Fund of India and not KSFE Welfare Fund.  The opposite party has already filed an Appeal challenging this before the Commissioner of Appeals, Cochin.  The opposite party is and has been willing to refund the said amount if and when the same is refunded to the opposite party by the Service Tax Authorities.  That since the same activity was undertaken by the opposite party to benefit the subscribers including the complainants without any consideration being charged or received whatsoever.  It is further contended that the order in original issued to the complainants dated 19.09.2019 by the Central Tax and Central excise Kollam Division states that “As per principles of natural justice, Show Cause Notice was issued to the applicants requiring them to show cause as to why the claim should not be rejected as the claimant is not a party to the case based on which the Refund is claimed in application, due to non-submission of required documents and due to duplication of the claim as KSFE has already filed Refund is claimed for the same amount and decision has already been taken in the said case.  Further applicant was also asked to show cause as to why the amount of claim if sanctioned should not be deposited to Consumer Welfare Fund as unjust enrichment was not refuted by the applicant”.  Thus the complainants were given an opportunity to present their case with regard to the duplication of refund request and the complainants chose not to appear before the Department and to submit their claims.  Therefore the opposite party is not liable in taking adequate steps.  The opposite party provided assistance in every possible ways to its subscribers including the complainants in filing the refund applications.  Further the opposite party had also filed a representation before the concerned department stating that the opposite party  filled the refund request on behalf of the subscribers on representational rights and in the event of duplication of request due to the individual refund claims filed by the subscribers, to consider their claims and to refund the amounts.  Various subscribers who filed the refund claims within time received the refund amount.

The opposite party opposes vehemently the averments in the complaint and contend that the Central Excise Department is liable to refund the service tax paid by the complainants and not the opposite party.  After collecting the Service Tax from its subscribers, the opposite party paid the same to the concerned department as is statutorily required.  Thus, the direction is passed against the department to refund the Service Tax by the Hon’ble High Court and not against the opposite party.  Thus, the opposite party refutes the allegation made by the complainants that the opposite party failed to pay the refund alleging deficiency in service.  The opposite party further contends that the allegations raised in the complaint that the department is responsible for the disbursement of the refund and opposite party cannot be made liable for any decisions taken by the department with regard to the same and contends that complainants lack cause of action to entertain a complaint under the Consumer Protection Act, 2019 as the Department is liable to refund the service tax and not the opposite party.  The opposite party contends that in the light of the above discussed facts the complaint is not maintainable before this Hon’ble Commission and that there exists no cause of action against the opposite party and further pleads that above complaint filed by the complainants be dismissed at the earliest with costs in the interest of justice. 

Evidence of the complainant consists or oral testimony of the complainant and marked documents Exts.P1 to P3.  Opposite party has filed version but failed to adduced evidence.

In the view of the above pleadings the points that arise for consideration are:-

1. Whether there is any deficiency in service on the part of the opposite party in returning the service tax amount to be complainant?
2. Whether the complainants are entitled to get the compensation?
3. Reliefs and costs?

Point No.1 to 3     

For avoiding repetition of discussion of materials these three points are considered together.  According to the complainants he and his family members have been subscribers of KSFE.  The chitty subscribers have paid chitty installment regularly up to 93 instalments out of the total of 100 instalments and the chitty closes in December 2020.   It is pertinent to note that the chitty subscribers have been ordered refund of the service tax paid between 1^st July 2014 to 13^th May 2015.  On the strength of the order in -W.A Nos.474/2014 and 968/2014 dated 14.03.2018 by the  Hon’ble High Court .  As instructed by KSFE, complainants had applied for the refund to the central tax and excise before the registered office, Kollam and complainants gave a letter of authorization before the KSFE  to collect refund.  But unfortunately the complainants have not received the service tax order by the Hon’ble High Court till date.  Thereafter complainant had received a letter from the central excise stating that there was a duplication of request and the refund amount is given to the opposite party welfare fund.  Anyhow complainants have   received a recovery notice for the 7 instalments with penal interest.  According to the complainants they are ready and willing to pay the 7 instalments after deducting the amount ordered by Hon’ble High Court.

Though opposite party appeared and filed version they failed to cross examine the complainants or produce any evidence to disprove the averments in the complaint.  According to the opposite party, they are conducting a Non-Banking Finance Company, fully owned by the Government of Kerala engaged in the business of Chit funds and further pleads that the complainants had filed the present complaint without acknowledging the complete facts.  It is true that there is an order by the Hon’ble High Court of Kerala to refund the service tax payable between 01.07.2014 to 13.05.2015.  But that order is against the central excise department and KSFE is not liable to pay any such refund to the complainants and further pleads that the complainants have failed to produce the order of the Hon’ble High Court before this Commission.  Moreover they are not parties to those cases and refutes the allegation raised by the complainants for refund amount is given to the KSFE Welfare Fund.  Opposite party further denies that there is no such KSFE Welfare Fund. 

The complainants have produced Ext.P2 document which is issued from                 In the said order wherein it has been specifically mentioned about the reimbursement of service taxes for which KSFE has issued a certificate to that effect, the applicant has paid Service Tax amount at the branch was also appended along with the Refund application filed in Form R.  This was one among the 15342 numbers of above applications received in the office with reference to the above High Court order within 13.03.2019.  As per certificate issued by KSFE, details of service tax they had collected from the complainants are as given under:-

Anyhow KSFE, Vadayattukotta Branch had filed separate claim for the refund of the service tax remitted by them to the Department on Foreman’s Commission for the Chits run by them between 1^st July, 2012 and 13^th May, 2015 which was sanctioned and deposited to Consumer Welfare Fund vide Order-In-Original No.13/2019-20(Refund) KSFE.  On a perusal of the documents submitted by applicant and KSFE branch it was noticed that the applications pertain to the same amount that was claimed as Refund by the KSFE, Vadayattukotta Branch.  Anyhow the said order is yet to reach legal finality as the appeal is pending with Commissioner(Appeals), Central Tax & Central Excise, Cochin.  KSFE is also collecting “Letter of Authorization” from some of the applicants authorizing  KSFE to receive the Refund amount on Chittal’s behalf.  Hence as the remitter of Service Tax has already applied for the amount claimed in present application, this Refund application appeared to be duplication of the one already applied for by the KSFE.

As per principles of natural justice, Show Cause Notice was issued to the applicants requiring them to show cause as to why the claim should not be rejected as the claimant is not a party to the case based on which the refund is claimed in application, due to non-submission of required documents and due to duplication of the claim as KSFE has already filed Refund claim for the same amount and decision has already been taken in the said case.  Further applicant was also asked to show cause as to why the amount of claim, if sanctioned should not be deposited to Consumer Welfare Fund as unjust enrichment was not refuted by applicant.

It is pertinent to note that 470 applicants in total appeared for personal hearing.  Majority of applicants failed to appear for personal hearing owing to the fact that they are not familiar with the laws and procedures under Service Tax Act.  All those who appeared for personal hearing submitted that they had applied for the refund on the basis of documents provided by KSFE branch and they were not registered with service tax themselves.  It is interesting to note that many of the applicants who came for the personal hearing also confirmed that they had given authorization letters to KSFE branches to collect the refund amount on their behalf.  The order issued by this office sanctioning and crediting the refund application by KSFE branch to Consumer Welfare Fund is currently in appeal with Hon’ble Commissioner(Appeals), Cochin.  Since the application at hand pertains to the amount that has already been claimed by KSFE and sanctioned and credited to Consumer Welfare Fund, and as said matter is sub-judice.  It is very pertinent to note that the complainants including the subscribers who become the chittals of KSFE to collect the refund of the Service Tax the KSFE has a boundant duty to collect the Service Tax based upon the order of the Hon’ble High Court in W.A Nos.474/2014 and 968/2014 dated 14.03.2018.  But KSFE failed to act upon the order and the application preferred by the KSFE before the Consumer Welfare Fund become duplication due to the defect from the part of the KSFE.  In the circumstances KSFE has an obligation to collect and refund the service tax to the complainants in the interest of justice.  In the result we find more strength in the argument of the complainants with regard to the service tax.  So in the interest of justice the complaint is only to be allowed.  Therefore complainants are entitled to realize Rs.4334/- together with interest @ 12% per annum and compensation of Rs.2,000/- and Rs.1000/- as costs of the proceedings.  These amounts should be calculated from the date of complaint until they are fully realized by the complainants.

In the result complaints stands allowed in the following terms:-

1. The opposite party is directed to file application before the Consumer Welfare Fund and collect the Service Tax and refund it to the complainants.
2. The opposite party is further directed to pay Rs.2,000/- as compensation and Rs.1000/- towards the costs.
3. The opposite party is directed to comply with the above directions within 45 days from the date of receipt of the order failing which the complainants can initiate execution proceedings.

Dictated to the Confidential Assistant  Smt. Minimol S. transcribed and typed by her corrected by me and pronounced in the  Open Commission this the 14^th day of  August 2023.

Sd/-

STANLY HAROLD

MEMBER

Sd/-

S.K.SREELA

PRESIDENT

Sd/-

S.SANDHYA RANI

MEMBER

Forwarded/by Order                                                                                                           

               Senior superintendent

INDEX

Witnesses Examined for the Complainant:-Nil

Documents marked for the  complainant

Ext.P1              : Certificate dated 13.03.2019

Ext.P2             : Recovery notice from KSFE

Ext.P3             : Sample one letter from Central Excise, Kollam.

Witnesses Examined for the opposite party:-Nil

Documents marked for opposite party:-Nil