TDS refund cannot be withheld against a separately contestable demand; immediate release was directed.

A TDS refund cannot be withheld merely because the department asserts an outstanding demand against the TAN number when that demand remains separately contestable. Relying on the Supreme Court precedent in Bharti Cellular and noting the department's admission that the refund was payable, the Rajasthan HC directed immediate release of the refund. The alleged outstanding demand was left open for the department to pursue separately, and for the assessee to contest in accordance with law, without affecting the refund entitlement.

---

---

Issues: Whether the refund relating to tax deducted at source was required to be released forthwith despite the department's stand that it could be adjusted against alleged outstanding demand relating to the TAN number.

Analysis: The parties were ad idem that the controversy stood covered by the Supreme Court's decision in Bharti Cellular, and the Court also noted the department's admission that refund was required to be made, while leaving the alleged outstanding demand open for the department to pursue separately and for the petitioner to contest in accordance with law.

Conclusion: The refund relating to the TDS was directed to be released forthwith.

Final Conclusion: The writ petition was disposed of by directing immediate release of the refund, without prejudice to the department's liberty to pursue any separate demand in accordance with law.

Ratio Decidendi: A refund due to the assessee cannot be withheld merely on the basis of an unadjudicated or separately contestable demand, and must be released when the department itself acknowledges that refund is payable.

---