Tax Dept Rejected Refund Application Stating They can Keep it in Abeyance Until An appeal Filed: Patna HC Deprecates Conduct of State Tax Authority and Restores Application [Read Order]

In a recent case, the Patna High Court deprecates the conduct of state tax authorities in rejecting refund applications stating they can keep it in abeyance until an appeal is filed and restored application.

Progressive Constructions Limited, the petitioner is a Private Limited Company incorporated under the Companies Act, of 1956, the order passed on a refund application. It was stated that the Officer entrusted with the statutory authority to consider refund applications has dismissed the refund application leaving liberty to the petitioner/assessee to approach the authority after the matter is settled.

An appeal before the High Court, under Section 79, is maintainable only if there is a substantial question of law arising in the case. The court pointed out that the limitation period for filing such an appeal is 90 days from the date of communication of the order to the dealer or the Commissioner.

In the case of orders challenged in the superior courts, there is a specific provision under Section 71 empowering the authority considering the refund to withhold such refund and keep it in abeyance. Section 71 specifically provides that when an order giving rise to a refund is the subject matter of an appeal or further proceeding, then the authority competent to grant such refund thinks that the disbursal of refund amounts would adversely affect the interest of Revenue, then with the previous approval of the Commissioner, the refund can be withheld till it deems fit.

The Commissioner by a proviso, has also been given the discretion to permit the refund if the situation does not warrant withholding of such refund.

The Division bench comprising Chief Justice K. Vinod Chandran and Justice Partha Sarthy deprecated the conduct of the Officer in the strongest of terms and allowed the writ petition by setting aside the impugned order.

Shri D.V. Pathy, counsel appeared for the petitioner and Shri Vikash Kumar, counsel appeared for the respondents.

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