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2025 (2) TMI 1050 - HC - VAT / Sales TaxRefund of excess tax deposited during appellate proceedings - infringement of Articles 14 19(1)(g) and Article 265 of the Constitution of India or not - HELD THAT - The respondents cannot retain the amounts deposited by the petitioner pursuant to condition imposed by the appellate authority for stay of the assessment order and contend that there is no necessity to refund the same. If the actual tax assessed from the petitioner is much less than the amount which the petitioner had deposited at the time of filing the appeal and seeking stay retention of the balance after the assessing officer post remand reduced the demand drastically would undoubtedly amount to unjust enrichment on the part of the respondents and would be violative of Article 14 and Article 265 of the Constitution of India. The respondents are directed to refund the amounts deposited by the petitioner after adjusting the same towards the tax finally assessed post remand by the assessing authority for the Assessment Year 2013-14 and Assessment Year 2014-15 with interest at the rate of 9% per annum from 09.01.2021 till the date of actual payment. The respondents shall also pay cost of Rs. 2, 00, 000/- to the petitioner for unjustly retaining the said amount for the last four years. The cost as well as the refund shall both be paid to the petitioner within six weeks from the date of receipt of a copy of this order. Petition allowed.
The issues presented and considered in the Jharkhand High Court judgment are as follows:1. Whether the respondents are obligated to refund the excess tax deposited by the petitioner during appellate proceedings for Assessment Year 2013-14 and 2014-15?2. Whether the inaction of the respondents in refunding the excess tax is violative of Articles 14, 19(1)(g), and Article 265 of the Constitution of India?Issue-Wise Detailed Analysis:Issue 1:Relevant legal framework and precedents:- The petitioner challenged assessment orders for Assessment Years 2013-14 and 2014-15 under section 79 of the Jharkhand VAT Act.- The appellate authority ordered the petitioner to deposit 15% of the demanded amount for a stay of the assessment order and demand notice.Court's interpretation and reasoning:- The petitioner complied with the order and deposited Rs. 24,00,000/- and Rs. 26,00,000/- respectively.- After remitting the matter back to the Assessing Officer for fresh assessment, the tax liability of the petitioner was reduced.- The respondents demanded additional tax without giving credit for the amounts already deposited by the petitioner.Key evidence and findings:- The petitioner made timely deposits as per the appellate authority's order.- The fresh assessment orders post-remand reduced the tax liability of the petitioner significantly.Application of law to facts:- The Court found that the respondents could not retain the amounts deposited by the petitioner after the assessing officer reduced the demand drastically post-remand.- Retention of the excess amounts by the respondents would constitute unjust enrichment and violate constitutional provisions.Conclusions:- The Court directed the respondents to refund the excess amounts deposited by the petitioner with interest and pay costs for unjustly retaining the funds.- The respondents were ordered to refund the amounts with interest at the rate of 9% per annum and pay costs of Rs. 2,00,000/- to the petitioner within six weeks.Significant Holdings:- "The respondents cannot retain the amounts deposited by the petitioner pursuant to condition imposed by the appellate authority for stay of the assessment order and contend that there is no necessity to refund the same."- The Court established the principle that retention of excess amounts by the respondents after significant reduction in tax liability post-remand would amount to unjust enrichment and violate constitutional provisions.- Final determination: The respondents were directed to refund the excess amounts deposited by the petitioner and pay costs within six weeks.In conclusion, the Jharkhand High Court held that the respondents were obligated to refund the excess tax deposited by the petitioner during appellate proceedings and that their inaction in doing so was violative of constitutional provisions. The Court ordered the respondents to refund the amounts with interest and pay costs to the petitioner within a specified timeframe.
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