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Issues: Whether the Tribunal erred in refusing to direct refund of the portion of a refund for Assessment Year 2005-06 which was wrongfully adjusted in excess of 20% of the demand for Assessment Year 2020-21 contrary to the Tribunal's earlier stay order, and whether the Respondents must be directed to refund the excess amount with interest.
Analysis: The Tribunal had on January 17, 2025 granted a conditional stay of recovery for AY 2020-21 directing that only 20% of the outstanding demand be adjusted from the refund due for AY 2005-06 and that the balance be stayed. Despite that order, the Respondents adjusted the entire refund on February 17, 2025. The Tribunal later extended the stay but declined to direct immediate refund of the excess adjustment. The High Court examined the record, including the challans evidencing the full adjustment, the Tribunal's stay order limiting adjustment to 20%, and the absence of any vacating or amendment of that order prior to the February 17, 2025 adjustments. The Court found the Respondents' action of adjusting the entire refund during the subsistence of the Tribunal's order to be contrary to and in violation of the Tribunal's conditional stay, and noted that the Tribunal gave no valid reason to refuse directing a refund of the excess adjustment.
Conclusion: The impugned portion of the Tribunal's order is set aside. The Respondents are directed to refund Rs. 28,55,26,240 (the amount adjusted in excess of 20% of the demand) for Assessment Year 2005-06, together with interest as per law, to the Petitioner within three weeks from the date of uploading of the High Court order. The Tribunal's stay of recovery for AY 2020-21 continues to operate with this modification.
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