TaxTMI 
TaxTMI 
2009 (7) TMI 1157
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....orities for refund of the aforestated amount. After hearing the concerned advocates, this court, by an order dated June 9, 2008, disposed of the petition by observing that the petitioner should make a representation to the respondent-authorities for refund of the amount. Accordingly, a representation dated September 30, 2008 was made by the petitioner, but the said representation has been turned down by the impugned order dated February 19, 2009. By virtue of the impugned order dated February 19, 2009, respondent No. 2 has opined that grant of refund of Rs. 14,52,29,260 is likely to adversely affect the Revenue and, therefore, he has ordered withholding of the said amount till further orders under the power vested in him under section 33C of the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the APGST Act") read with section 40(2) of the APVAT Act. Being aggrieved by the aforestated order, the petitioner has approached this court with a prayer that the impugned order be quashed and the respondents be directed to pay the amount of refund with interest thereon. The learned Senior Advocate, Sri E. Manohar, appearing for the petitioner, has submitted that the impugned....
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....dur [1987] 167 ITR 542 (P&H); [1987] Tax LR 814. In the said judgment, Punjab and Haryana High Court has held that payment of refund cannot be withheld during pendency of reference, unless it is likely to affect the Revenue adversely. The learned Senior Advocate has also relied upon an un-reported judgment delivered by this court in Writ Petition No. 22266 of 2008 and batch, disposed of on April 2, 2009 Since reported in [2009] 23 VST 573 (AP), in the case of Pulp N'Pack Private Ltd. v. Commercial Tax Officer, Nidadavolu Circle. This court has held in the said judgment that withholding of refund would have adverse impact on the dealer and by virtue of such an action on the part of the State, the assessee is deprived of higher rate of interest. It has also been held in the said judgment that power to withhold the amount of refund is not an absolute power, and it has to be exercised only after forming an opinion about the possible adverse impact of paying the amount of refund, upon the Revenue. It has been finally submitted by the learned Senior Advocate that no specific reason has been stated in the impugned order for withholding the refund. What is stated therein is that the p....
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....down in the said judgment is to the effect that if the Income-tax Officer is satisfied that interest of the Revenue would suffer due to payment of refund, it is open to the Revenue to withhold the amount. It has been further submitted by the learned Standing Counsel that there was a similar provision with regard to withholding payment of refund in the Income-tax Act, 1961 and, therefore, the law laid down in the aforestated judgment can be very well applied to the instant case. The learned Standing Counsel has also relied upon the judgment delivered in the case of Gopi Bar v. Commercial Tax Officer [1997] 106 STC 188, wherein this court had refused to exercise its extraordinary jurisdiction under article 226 of the Constitution of India for giving a direction to the respondent-State authorities to refund the amount of tax. Thereafter, the learned Standing Counsel has relied upon the judgment delivered in the case of Sarvaraya Textiles Ltd. v. C.T.O. [1991] 82 STC 367, wherein this court had held that an order withholding refund was proper as permission of the Deputy Commissioner was obtained before passing the impugned order withholding the refund. In the circumstances, it has b....
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.... of section 40(2) of the APVAT Act, the concerned authority including the Deputy Commissioner must form an opinion that payment of refund would adversely affect the Revenue. Though there is no provision in the section that reasons should be recorded for withholding the amount of refund, in our opinion, it becomes obligatory on the part of the Deputy Commissioner to record reasons before according approval for withholding the amount of refund. In normal circumstances, once the assessee succeeds in the litigation, the respondent-authorities are bound to refund the amount of tax, which was collected from the assessee. Simply because an appeal is filed, the authorities would not be empowered to withhold the amount of refund. So as to see that interest of the State is protected, the Legislature has enacted section 40(2) of the APVAT Act, but the power granted to withhold the amount vested with the assessing officer has to be exercised with the approval of the Deputy Commissioner. Before granting approval, the Deputy Commissioner, in our opinion, is duty bound to consider the facts of the case and record the reasons for which he would like to give his approval for withholding payment o....
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....ing to the assessee. In the instant case, the concerned authorities including the Commissioner of Commercial Taxes, so as to withhold the amount of refund, ought to have come to a conclusion that the petitioner namely, BSNL is in such a bad shape that in the event of the Revenue succeeding in the tax revision case, it would not be possible or it would be extremely difficult for the respondent-authorities to recover the said amount from it, or, should have come to a conclusion that the petitioner would vanish into thin air, or for any such reason, the Revenue would not be in a position to recover the amount in question. The Deputy Commissioner, or, in the instant case, the Commissioner of Commercial Taxes, must form an opinion that the grant of refund "is likely to adversely affect the Revenue". For forming such an opinion, he must consider all relevant facts and record the reasons. In the instant case, no reason has been recorded by the Commissioner of Commercial Taxes before granting his approval. Even in the counter-affidavit filed by the Deputy Commissioner (CT), she has not given any reason which would give any justification to the action taken by her or by the Commissioner o....
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....er-assessee, so as to adversely affect the State exchequer, the opinion formed by the Commissioner of Commercial Taxes cannot be said to be just and proper. Thus, the circumstances giving rise to an apprehension in the mind of the authority in the event of the Revenue succeeding in the TRC, recovery of refund from the petitioner-assessee would be difficult, must be in existence and we do not find any such circumstance on the record. Even the deponent of the counter-affidavit has not referred to such circumstances and, therefore, in our opinion, withholding of payment of the refund cannot be justified by the Revenue. We, therefore, come to the conclusion that there was no material for the Commissioner of Commercial Taxes to form an opinion that payment of the refund would adversely affect the Revenue. It is deplorable that the State, which is supposed to act fairly, has come out with a case that TRC No. 245 of 2008 has been filed against the order of the STAT in T.A. No. 1142 of 2007 and, therefore, the power under section 40(2) of the APVAT Act has been exercised. It is also pertinent to note that by not making payment of the refund, the respondent-authorities, who are lit....