Refund of statutory pre-deposit follows when an approved resolution plan extinguishes the underlying tax liability and appeals become infructuous.

A statutory pre-deposit made to file VAT appeals was treated as part of the disputed tax liability, and once an approved resolution plan under insolvency law extinguished liabilities beyond the amount admitted in that plan, the department could not retain the excess deposit. The pending appeals had become infructuous because the underlying tax liability no longer survived, and the refund provisions under the Rajasthan VAT Act and Rules supported reimbursement. The refund claim was therefore maintainable, and the assessee was entitled to return of the pre-deposit with applicable interest.

---

---

Issues: Whether the assessee was entitled to refund with interest of the amount deposited as mandatory statutory pre-deposit while filing appeals, after the resolution plan was approved and the pre-resolution tax liabilities stood extinguished.

Analysis: The pre-deposit under section 82(3) of the Rajasthan Value Added Tax Act, 2003 formed part of the disputed tax liability. Once the National Company Law Appellate Tribunal approved the resolution plan and restricted the department's claim to Rs. 61.05 crores, all claims beyond that amount stood extinguished in terms of the insolvency regime. The pending appeals had become infructuous because the underlying liability itself no longer survived. In that situation, the department could not retain an amount paid only as a procedural pre-condition for the appeals, since such retention would exceed the liability finally recognised under the resolution plan. The refund entitlement was also supported by the refund provisions under section 53 of the Rajasthan Value Added Tax Act, 2003 and rule 27 of the Rajasthan Value Added Tax Rules, 2006.

Conclusion: The refund claim was maintainable and the rejection by the Tax Board was unsustainable. The assessee was entitled to reimbursement of the pre-deposit amount with interest.

Ratio Decidendi: Where a statutory tax liability is finally crystallised and curtailed under an approved resolution plan, any pre-deposit made as a condition for filing tax appeals, to the extent it exceeds the finally admitted liability, must be refunded with applicable interest.

---