Refund Cheque Issued By An Educational Institute Dishonored.

[Surej Kartha]

Sir,

Couple of months back I joined a software training institute for a short term course by paying an advance amount. Unfortunately, owing to non-availability of trainers the course was cancelled after a few classes. I was issued a post-dated cheque by the institute as refund. Since this was before the advent of GST, the institute deducted around 13% service tax from my advance payment.

On presenting the cheque, it was dishonored. The reason given by the bank was “Insufficient funds.” What should I do next?

Also, I asked the institute to show their valid service tax registration number. They are refusing to do so. Is it a crime to charge service tax or GST without having a valid service tax registered number or GSTN? Is it possible to get that money back?

The institute claims to be a “Pvt. Ltd.” company. But they are not listed on Ministry of Corporate Affairs website. What are the consequences of running an unregistered business organization?

Look forward to your suggestions.

[Dr. Ashok Dhamija]

After issuing legal notice to the drawer of the cheque, as required under Section 138 of the Negotiable Instruments Act, you can file a case of cheque bounce by following the procedure laid down in the said legal provision.

Section 32 of the Central GST Act lays down as under:

“32. Prohibition of unauthorised collection of tax. – (1) A person who is not a registered person shall not collect in respect of any supply of goods or services or both any amount by way of tax under this Act.

(2) No registered person shall collect tax except in accordance with the provisions of this Act or the rules made thereunder.”

So, it is not permissible to collect GST without getting registration under the same.

You may also confirm from the Registrar of Companies of the state concerned and file a complaint with them, if needed.

     

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Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.

[Surej Kartha]

Thank you Sir for your valuable advice.

[Author]

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