SIJO SEBASTIAN vs UNION OF INDIA
- Court
- Karnataka High Court
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HC-KAR
NC: 2026:KHC:53367
WP No. 7362 of 2026
CNR: KAHC010161332026
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 25 DAY OF SEPTEMBER, 2026
BEFORE
THE HON'BLE MR. JUSTICE B M SHYAM PRASAD
WRIT PETITION NO. 7362 OF 2026 (T-RES)
BETWEEN:
SIJO SEBASTIAN
S/O. SEBASTIAN P.K.,
R/O. NO.1, WATER WOODS,
RAMAGONDANAHALLI,
WHITEFIELD MAIN ROAD,
BANGALORE, 560 066
…PETITIONER
(BY SRI. SIJO SEBASTIAN, PARTY-IN-PERSON)
Digitally
signed by
VANAMALA
N
Location:
HIGH
COURT OF
KARNATAKA
AND:
1. UNION OF INDIA
THE PRINCIPAL COMMISSIONER OF
CENTRAL TAX 2016
OFFICE OF THE PRINCIPAL COMMISSIONER
OF CENTRAL TAX,
BENGALURU EAST COMMISSIONERATE,
BMTC BUILDING, 4TH FLOOR,
ABOVE BMTC BUS STAND,
OLD AIRPORT ROAD, DOMLUR,
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HC-KAR
NC: 2026:KHC:53367
WP No. 7362 of 2026
CNR: KAHC010161332026
BENGALURU 560071
2.
ORIX CORPORATION INDIA LIMITED,
(FORMERLY KNOWN AS ORIX AUTO
INFRASTRUCTURE SERVICES LIMITED)
NEW BYAPPANAHALLI EXTN-1,
BANDAPPA COLONY,
OLD MADRAS ROAD,
OPPOSITE MONTFORT COLLEGE,
BENGALURU, PIN 560038
3. ORIX LEASING AND FINANCIAL SERVICES
INDIA LIMITED,
NEW BYAPPANAHALLI EXTN-1,
BANDAPPA COLONY,
OLD MADRAS ROAD,
OPPOSITE MONTFORT COLLEGE,
BENGALURU, PIN 560038
4. THOMSON REUTERS INTERNATIONAL
SERVICES PRIVATE LIMITED,
SALARPURIA SATTVA KNOWLEDGE COURT
4TH AND 5TH FLOOR,
SOUTH BLOCK, PLOT NO. 9, PHASE I,
DODDANEKUNDI INDUSTRIAL AREA,
K.R. PURAM HOBLI,
BANGALORE, 560048
…RESPONDENTS
(BY SRI. JEEVAN J NEERALGI, ADVOCATE FOR R1;
SRI. V. RAGHURAMAN, SENIOR ADVOCATE FOR
SRI. ARIHANT TATER AND
MS. ASHWINI SHANTHARAM, ADVOCATE FOR
R2 & R3;
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HC-KAR
NC: 2026:KHC:53367
WP No. 7362 of 2026
CNR: KAHC010161332026
SRI. SYED M PEERAN, SRI. ANIRUDH A S &
SRI. SAGAR AGRAWAL, ADVOCATES FOR
SRI. RAVI RAGHAVAN, ADVOCATE FOR R4)
THIS WP IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA PRAYING TO ISSUE A
WRIT OF MANDAMUS DIRECTING THE
RESPONDENTS TO STOP COLLECTING ANY
ADDITIONAL AMOUNT FROM THE PETITIONER
TOWARDS THE ALLEGED GST/CESS
ADJUSTMENT. DECLARE THAT ANY RECOVERY OF
ALLEGED GST OR INPUT TAX CREDIT LOSS
WITHOUT FOLLOWING THE MACHINERY
PRESCRIBED UNDER THE CGST ACT, 2017 IS VOID
AB INITIO AND UNENFORCEABLE. DIRECT
RESPONDENT NO.2 AND 3 TO REFUND THE
ADDITIONAL AMOUNTS ALREADY RECOVERED
ILLEGALLY FROM THE PETITIONER.
THIS PETITION, COMING ON FOR ORDERS,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD
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HC-KAR
NC: 2026:KHC:53367
WP No. 7362 of 2026
CNR: KAHC010161332026
ORAL ORDER
The petitioner is on the fourth respondent’s
Rolls . The petitioner seeks directions against his
Employer and the second and third respondents from
collecting ‘ additional amount towards GST/CESS
adjustment’ and for a declaration that any recovery of
GST or input tax credit loss without following the
machinery prescribed under the Goods and Services
Tax Act, 2017 is void ab initio . The petitioner also
seeks directions not to his employer but to the
second and the third respondents to refund the
additional amounts already recovered. The facts
necessary for a decision when stated in concise are
thus.
2. The petitioner has signed an Agreement
dated 25.06.2025 [ the Agreement ] with his Employer
[ the fourth respondent ] for use of the subject vehicle.
This Agreement permits the petitioner to use the
vehicle as described in appended Schedule ‘A’ on
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HC-KAR
NC: 2026:KHC:53367
WP No. 7362 of 2026
CNR: KAHC010161332026
terms with authority in the Employer to deduct from
his remuneration, all the lease rentals, expenses and
interest. The relevant term reads as under.
“ Thomson Reuters to deduct from
his/her remuneration all the lease rentals,
expenses, charges, costs or interest etc,
liable to the paid by Thomson Reuters to
ORIX Leasing and Financial Services India
Limited (OLFS) under the Lease Agreement
for whatsoever reasons in taking the
delivery of the Vehicle on lease and its use
during the Lease Period by the Employee
and any pre-mature surrender of the
Vehicle, except to the extent law does not
permit such deduction.”
The second and the third respondents, who have
purchased the vehicle, have leased the vehicle to the
Employer on 26.05.2025 under a Master Lease
Agreement dated 20.06.2022 [ the Master Lease
Agreement ]. The monthly lease rent fixed is in a sum
of Rs.1,57,553/-. The petitioner has the use of the
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WP No. 7362 of 2026
CNR: KAHC010161332026
vehicle under the terms sub-lease as incorporated in
the Agreement, including the afore terms.
3. It is obvious that the Agreement for use of
the vehicle by the petitioner is signed after the vehicle
is received by the Employer from the second/third
respondent. The Employer and the second/third
respondent have agreed upon monthly lease rent in a
sum of Rs.1,57,553/- taking into consideration not
just the GST but also the compensation CESS. The
Union of India, with effect from 22.09.2025, has
withdrawn the Compensation CESS merging it with
GST resulting in GST rate at 40%. The second and
the third respondents, as is canvassed before this
Court, have increased the monthly lease chargeable
by the Employer because they cannot set off the
compensation CESS which was spread over the lease
period under the Master Lease Agreement and
because they are required to absorb this as cost.
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HC-KAR
NC: 2026:KHC:53367
WP No. 7362 of 2026
CNR: KAHC010161332026
Consequently, the Employer has raised a changed
demand on the petitioner.
4. Mr. Sijo Sebastian, the petitioner [ party-in-
person ] premises his case in the assertion that the
demand for the increase partakes the nature of a
demand for tax outside the machinery of the GST Act
and therefore his employer [ the fourth respondent ]
cannot change the monthly lease rent. The petitioner
relies upon the decision of the Hon'ble Supreme
Court in the case of Radha Krishnan Industries v.
1
State of Himachal Pradesh to assert that this Court
must examine his grievance with the second and the
third respondents raising an invoice for an additional
sum against the Employer and consequentially the
Employer deducting this amount from his salary. The
petitioner contends that in the circumstances of the
case he may not be relegated to the alternative
remedy.
1
(2021) 6 SCC 771
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WP No. 7362 of 2026
CNR: KAHC010161332026
5. On behalf of the respondents
Mr. V. Raghuraman, the learned Senior counsel
leading the learned counsels on record for the second
and third respondents and the Employer, submits
that notwithstanding the merits of the petitioner’s
claim, this Court must consider whether the
petitioner can assert any cause against the second
and the third respondents and that if the petitioner
can only assert a cause against the Employer,
whether he must raise this cause invoking the
agreement for arbitration that is part of the
Agreement. On the first aspect, Mr. V. Raghuraman
submits [a] that the second/third respondent's
entitlement to receive the increase in the cost
because of the withdrawal of the compensation CESS
from the fourth respondent is under the Master Lease
Agreement, [b] that the petitioner is not a party to
this Agreement and [c] that the fourth respondent,
who is party to the Master Lease Agreement, does not
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HC-KAR
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WP No. 7362 of 2026
CNR: KAHC010161332026
dispute its liability given its understanding of the
contractual terms.
6. This Court finds considerable force in
these assertions. If this Court were to issue any
direction to the second and the third respondents at
the petitioner's instance, this Court would be reading
a right in the petitioner under the Master Lease
Agreement to which he is not a party and when the
parties to this agreement viz ., the second/third
respondents and the Employer are not at lis on the
obligations under this agreement. If the petitioner in
these circumstances cannot assert a cause against
the second and the third respondents, the petition
must fail against them.
7. The fourth respondent has permitted the
petitioner to use the vehicle which is taken on lease
under the Master Lease Agreement from the second
and the third respondents subject to contractual
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HC-KAR
NC: 2026:KHC:53367
WP No. 7362 of 2026
CNR: KAHC010161332026
terms. If the petitioner relies upon the Clause as
extracted above to assert that the demand for an
additional sum is not permitted in law, the Employer
proposes to rely upon the petitioner's consent as
captured in Clause II (5) which reads as under.
“5. The Employee hereby consents, without
demur or protest, that in the event of any
increase in the lease rentals whether for
reasons referred to in Clause II (3) above or
due to any change in taxes, rates duties, etc.,
for any reason whatsoever, the Employee will
be liable to pay Thomson Reuters and
Thomson Reuters shall be entitled to deduct
such additional and further amounts from the
remuneration payable by it to the Employee,
as may be required to meet such increase.”
8. The question whether the Employer can
rely upon this Clause to justify deduction and
whether the petitioner can indeed succeed in
demonstrating that this Clause does not permit
deduction of the additional sum [ beyond
Rs.1,57,553/- per month ], will have to be decided
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NC: 2026:KHC:53367
WP No. 7362 of 2026
CNR: KAHC010161332026
based on all the terms of the contract that are
incorporated in the Agreement. The demand for
additional sum resulting in the change in the
monthly lease rent is not because of any demand by
the Authorities under the GST but is based on the
Employer’s acceptance that the change in the regime
insofar as compensation CESS has resulted in an
increase in the cost for the second/ third respondent
which must be absorbed by it and that it is entitled to
deduct this increase in cost as monthly lease rent
deduction from the petitioner's salary.
9. This is essentially a controversy that will
have to be decided in the proceedings between the
petitioner and the Employer, and this Court must
observe that the petitioner and the fourth respondent
have agreed for resolution of disputes and differences
in arbitration proceedings. The agreement for
arbitration which is contained in the reads as under.
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HC-KAR
NC: 2026:KHC:53367
WP No. 7362 of 2026
CNR: KAHC010161332026
“ Arbitration: Any dispute, any difference, any
claim or any non-payment (any of which shall be
treated as a dispute) whether present or future,
whatsoever between the parties under, arising
out of, relating to or in connection with the
provisions of the Arbitration and Conciliation Act,
1996 by a sole arbitrator to be appointed by
Thomson Reuters at its sole discretion. The
Employee hereby consents to the choice of
Thomson Reuters regarding the appointment of
the arbitrator. The venue of the arbitration shall
be Bangalore/Hyderabad.”
This Court, in the afore circumstances, is of the view
that the second question must be answered holding
that the petitioner must invoke this agreement for
resolution of its dispute against the fourth
respondent.
With liberty in this regard, the petition stands
disposed of.
Sd/-
(B M SHYAM PRASAD)
JUDGE
RB
List No.: 3 Sl No.: 2