Refund adjustment against a subsisting stayed tax demand is invalid, requiring restoration of the refund with applicable interest.

Adjustment of a refund against an earlier tax demand is impermissible where that demand remains stayed under an unchallenged interim order. The stay order, granted subject to specified deposits and recorded on the departmental portal, had attained finality before the refund adjustment. Setting off the refund against the stayed demand was therefore inconsistent with the subsisting stay and invalid. The adjusted refund must be restored with applicable interest in accordance with law.

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Issues: Whether a refund determined for one assessment year could be adjusted against an earlier tax demand that stood stayed by an unchallenged interim stay order.

Analysis: The demand for the earlier assessment year was stayed upon specified deposits, and the stay order had attained finality. The jurisdictional assessing officer had also placed the stay order on the departmental portal before the refund adjustment was made. Adjustment of the refund against the stayed demand was therefore inconsistent with the subsisting stay order.

Conclusion: The refund adjustment was invalid and could not be sustained; the refunded amount was required to be restored with applicable interest in accordance with law.

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