Refund withholding requires a reasoned risk to recovery; mere pendency of proceedings does not justify retention.

Refund withholding under the Haryana General Sales Tax Act is justified only where pending appellate or other proceedings are accompanied by a reasoned opinion that immediate refund is likely to prejudice recovery. Mere pendency of review or higher proceedings, without material showing a real risk to recovery, is insufficient. The note also draws support from analogous income-tax refund provisions to show that the withholding power is exceptional and must be exercised on supportable grounds, not as a routine consequence of pending litigation. On the stated facts, the withholding was unsustainable and refund release was directed.

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Issues: Whether refund could be withheld under section 44 of the Haryana General Sales Tax Act, 1973 merely because review proceedings were pending, without a reasoned opinion that grant of refund was likely to adversely affect recovery.

Analysis: Section 44 permits withholding of refund only when the order giving rise to refund is under appeal or further proceedings, or other proceedings are pending, and the assessing authority forms an opinion that granting the refund is likely to adversely affect recovery. Mere pendency of proceedings is insufficient. The material before the authority did not show any basis for concluding that recovery would be jeopardised, particularly where the assessee was a Government company. The Court also relied on analogous decisions under section 241 of the Income-tax Act, 1961, where refund could not be withheld solely because higher proceedings were pending.

Conclusion: The withholding of refund was unsustainable and the refund had to be released.

Final Conclusion: The writ petition succeeded, and the impugned order withholding the refund was quashed with a direction to release the refund with statutory interest, if any.

Ratio Decidendi: Refund can be withheld under the statutory refund-withholding power only when pending proceedings are coupled with a reasoned and supportable opinion that immediate refund is likely to prejudice subsequent recovery; pendency alone is not enough.

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