Department Retaining Balance Amount After Tax Demand Is Reduced Violates Article 14 & Article 265 Of Constitution: Jharkhand High Court
The Jharkhand High Court stated that retaining balance amount by department after the tax demand is reduced is violative of Article 14 & Article 265 of the constitution. The Division Bench of Chief Justice M.S. Ramachandra Rao and Justice Deepak Roshan observed that the department cannot retain the amounts deposited by the assessee pursuant to condition imposed by...
The Jharkhand High Court stated that retaining balance amount by department after the tax demand is reduced is violative of Article 14 & Article 265 of the constitution.
The Division Bench of Chief Justice M.S. Ramachandra Rao and Justice Deepak Roshan observed that the department cannot retain the amounts deposited by the assessee 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.
In this case, the assessment orders were passed and a demand notice was issued to the assessee/petitioner which was challenged by the assessee under section 79 of the Jharkhand VAT Act.
The assessee requested the Assessing Officer to pass a fresh assessment order and such orders were also passed reducing the tax liability of the assessee.
Subsequently, fresh assessment order post remand was also passed reiterating that the tax amounts are due from the assessee again without giving credit to the amount already deposited by the assessee at the time when it had preferred an appeal.
Inspite of several reminders given by the assessee the amount deposited by it at the time of filing of the appeal after deducting the tax, subsequently demanded, was not refunded by the department.
The assessee seeks direction to the department/respondents to refund excess tax amount deposited during appellate proceedings.
The bench opined that “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 bench directed the department to refund the amounts deposited by the assessee after adjusting the same towards the tax finally assessed post remand by the assessing authority.
In view of the above, the bench allowed the petition.
Case Title: M/s. Castrol India Limited v. The State of Jharkhand
LL Citation: 2025 LiveLaw (Jha) 18
Case Number: W.P.(T) No. 7098 of 2023
Counsel for Petitioner/ Assessee: M.S. Mittal and Salona Mittal
Counsel for Respondent/ Department: A.K. Yadav and Aditya Kumar
