Refund adjustment ceiling prescribed by memorandum upheld; excess adjustments must be refunded and recovery stayed pending appeal.

Assessing authority adjusted tax refunds in excess of the Office Memorandum threshold that conditions stay on payment/adjustment up to 20% of the disputed demand; the HC applied that mandate and found adjustments for assessment years 2017-18 to 2019-20 exceeded the prescribed 20% ceiling, holding such excess adjustments invalid. The court directed respondent to refund amounts adjusted beyond the 20% limit for those years and restrained recovery of the disputed demands for those years pending finalisation of the appeals.

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Issues: Whether the assessing authority adjusted refunds in excess of the ceiling prescribed by the Office Memorandum and whether the petitioner is entitled to refund of amounts adjusted beyond 20% of the disputed demand and restraint on recovery pending disposal of appeals.

Analysis: The Court examined the assessing authority's communications calling for deposit of 20% of the disputed demand and the Office Memorandum F. No. 404/72/93-ITCC dated 29.02.2016 as amended by Office Memorandum F. No. 404/72/93-ITCC dated 31.07.2017 which prescribes payment/adjustment up to 20% of disputed demand as condition for stay where appeals are pending. The Court compared the quantified demands, the 20% threshold for each assessment year, and the refunds adjusted by the revenue, finding that the adjustments made exceeded the 20% limit shown in the petition's table for the assessment years 2017-18, 2018-19 and 2019-20. The Court held that where applications for stay are pending and refunds are adjusted, the mandate of the Office Memorandum permits adjustment only up to the prescribed 20% in cases under paragraph 4(A), and therefore adjustments beyond that ceiling cannot stand.

Conclusion: The petition is allowed; respondent No.1 is directed to refund amounts adjusted in excess of 20% of the disputed demand for assessment years 2017-18, 2018-19 and 2019-20, and respondents are restrained from recovering any portion of the demands for those years pending finalisation of the appeals.

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