Denied refund of Rs 2.24 crore in service tax by the state GST department on the ground of ‘unjust enrichment’, the Indian Institute of Management, Ahmedabad (IIMA) has knocked on the Gujarat high court’s doors.
A bench of Justice N V Anjaria and Justice D M Desai on Wednesday issued notice to the department and sought its reply by June 7. This happened after IIMA’s counsel Paritosh Gupta submitted that a tribunal had not been constituted under the goods and service tax laws to make an appeal against the GST appellate authorities’ decision of rejecting nine different refund claims.
According to the case details, the premier institute runs its postgraduate programme in management for executives (PGPX), a one-year full-time residential course. IIMA courses were approved by the Centre and exempted from tax levy in 2011. However, the tax was demanded on courses run by IIMs on the grounds that they were not approved by the AllIndia Council for Technical Education. This dispute was settled by the Kerala high court, which ruled in favour of the IIMs.
IIMA continued to collect money from students to pay service tax to the GST department under protest that PGPX is not a programme liable to be taxed and that it would claim a refund when the issue of taxability is adjudicated in the IIMs’ favour. After the Kerala HC’s judgment, IIMA made nine claims for refund of the GST paid on fees collected from PGPX students between July 2017 and November 2018. In response, a show-cause notice was issued to IIMA proposing to reject refund claims on the ground that the details of tax passed on in respect of GST paid could not be verified. The institute rejected the refund claims on the grounds of unjust enrichment.
IIMA unsuccessfully appealed before the commissioner of state tax (appeals), and no reason was given. The institute approached the HC seeking direction to the state GST department to refund the GST paid and submitted that the rejection orders directly impact the students.
IIMA’s advocate submitted before the bench that there is no question of unjust enrichment because instead of letting each student claim refund, the institute chose to make the claims. Certificates from a chartered accountant
were supplied to negate the authorities’ claim of unjust enrichment that the institute did not pass over the refund amount to the students. Moreover, it was also contended that PGPX is not a taxable course.
