2016 (7) TMI 132 - HC - VAT and Sales Tax

Court invalidates tax officer's refund hold pending appeal, clarifies Supreme Court's authority over refund release

Shyam Industries Versus State Of Gujarat Through Commissioner Of Commercial Tax

The High Court held that the Commercial Tax Officer erred in staying the refunds pending the department's appeal to the Supreme Court. The officer's ... Stay on the refund granted to the petition on the ground that revenue has filed an appeal before the Supreme Court - Held that:- the Commercial Tax Officer, should not have passed the order staying the refunds of the petitioner merely on the ground that the department is in the process of filing appeal before the Supreme Court. The High Court had dismissed the department's appeal on 16.04.2015. The department had to thereafter take recourse in law in order to avoid refunding the amounts pursuant to the orders of the Tribunal and the High Court. The Commercial Tax Officer, at any rate cannot, unilaterally decide that since the department is in the process of filing appeal before the Supreme Court, the refund should not be released. Such order is, therefore, quashed. However, now that the department has filed appeal before the Supreme Court in which the Supreme Court has issued notice on application for delay condonation, on the application for leave to appeal and interim relief, there would be no further question of granting refund at this stage still such proceedings are disposed of by the Supreme Court or some interim order is passed directing the department to release fully or partially such refund amounts. Issues:1. Challenge to order staying refunds by Commercial Tax Officer due to pending appeal to Supreme Court.2. Validity of Commercial Tax Officer's decision to withhold refunds.3. Jurisdiction of Commercial Tax Officer in deciding refund release.Analysis:1. The petitioner challenged an order by the Commercial Tax Officer staying the refund pending the department's appeal to the Supreme Court for assessment years 2006-07 and 2009-10. The petitioner had succeeded before the Value Added Tax Tribunal and the High Court, but the department filed an appeal to the Supreme Court. However, at the time of the impugned order, no appeal had been filed. The Supreme Court later issued notice on the department's application for delay condonation and special leave petitions.2. The High Court held that the Commercial Tax Officer erred in staying the refunds solely based on the department's intention to appeal to the Supreme Court. The department's appeal had been dismissed by the High Court earlier, and the officer could not unilaterally decide to withhold the refund. The court quashed the order but noted that until the Supreme Court disposes of the appeal or issues an interim order, the department is not obligated to release the refund amounts.3. The court emphasized that the Commercial Tax Officer's jurisdiction does not extend to deciding refund release based on potential appeals. The officer's decision was deemed invalid, and the department's appeal to the Supreme Court would determine the final disposition of the refund amounts. The petition was disposed of with these observations and directions provided by the High Court judges.