Refund after remand is not automatic, but stay security cannot be extended once the assessment order is set aside.

When an assessment is set aside and remanded for fresh assessment, deposited tax is not automatically refundable unless there is a specific direction or adjudication granting refund, so the refund claim was declined. By contrast, security furnished only for stay of recovery cannot be continued once the assessment order is set aside and the demand no longer survives for that limited purpose, so insistence on renewal or extension of the bank guarantee was invalid and the guarantee was to be released. The matter was also directed to be completed expeditiously.

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Issues: (i) Whether the tax deposited by the assessee was refundable after the assessment order had been set aside and the matter remanded for fresh assessment without any specific direction for refund; (ii) Whether the Assessing Officer could insist on renewal or extension of the bank guarantee furnished as security for stay after the assessment order had been set aside.

Issue (i): Whether the tax deposited by the assessee was refundable after the assessment order had been set aside and the matter remanded for fresh assessment without any specific direction for refund.

Analysis: The disputed refund claim was examined in the light of the binding Full Bench view that where an assessment is set aside and the matter is remanded for fresh assessment, refund does not follow automatically unless there is a specific adjudication or direction that the amount is refundable. Since the assessment proceedings were still pending before the Assessing Officer, the amount could not be directed to be refunded at that stage.

Conclusion: The prayer for refund of the disputed tax was rejected.

Issue (ii): Whether the Assessing Officer could insist on renewal or extension of the bank guarantee furnished as security for stay after the assessment order had been set aside.

Analysis: The security was furnished only to support the stay of recovery granted during the pendency of the appeal. Once the assessment order was set aside, the underlying demand ceased to subsist for the purpose of continuing the security, and the authority had no basis to compel extension of the bank guarantee for five years or to direct the bank to secure its renewal or encashment.

Conclusion: The notice requiring extension of the bank guarantee was quashed and the assessee was held entitled to release of the bank guarantee.

Final Conclusion: The writ petitions succeeded only to the extent that the demand for renewal of the bank guarantee was invalid, while the claim for refund of the tax deposit was declined, and the assessment was directed to be completed expeditiously.

Ratio Decidendi: Where an assessment order is set aside and the matter is remanded for fresh assessment without a specific refund direction, deposited tax is not automatically refundable, but security furnished only for the stay of recovery cannot be continued once the assessment is set aside.

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