Patna High Court Deprecates State Tax Authority's Conduct; Orders Restoration Of Refund Application

The case revolved around the refund application filed by Progressive Constructions Limited, which was dismissed by the Officer entrusted with the statutory authority to consider such applications. The dismissal of the refund application was based on the grounds that the Department intended to challenge the Tribunal's order before the High Court, and hence, there was no finality on the matter.

The counsel representing the State contended that the Commissioner had agreed to file an appeal against the Tribunal's order within a day or two. However, the High Court noted that even though the period for filing the appeal had expired long before the impugned order, no appeal had been filed till the date of the court's decision.

In its order, the Patna High Court clarified that 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. Even considering the provisions for interest on delayed refund under Section 70, the court emphasized that the impugned order denied the petitioner any interest until the matter is disposed of by the High Court, and a fresh refund application is filed before the authority.

The court also discussed Section 71, which empowers the authority considering the refund to withhold it if an order giving rise to a refund is the subject of an appeal. However, the court clarified that the Commissioner's agreement to file an appeal did not fall under the ambit of Section 71, which comes into play only after an appeal is filed.

The Patna High Court sternly criticized the State Tax Authority for rejecting the refund application outright, stating that the authorities could have kept it in abeyance until an appeal was filed, rather than rejecting it immediately. The court deemed this action to be in derogation of the statutory provisions and an attempt to bypass the obligation of paying interest to the petitioner.

Consequently, the court set aside the impugned order and directed the restoration of the refund application before the appropriate authority. Moreover, it ordered the Officer who passed the impugned order to pay a litigation cost of Rs. 2500/- to the petitioner within two weeks.

Case Title: Progressive Constructions Limited vs. The State of Bihar and Another

Case Citation: 2023 LiveLaw (Pat) 89

Case No.: Civil Writ Jurisdiction Case No.7619 of 2023

Appearance: For the Petitioner/s: Mr. D.V. Pathy, Advocate Mr. Hiresh Karan, Advocate Mr. Sadashiv Tiwari, Advocate ; For the Respondent/s: Mr.Vikash Kumar (SC-11)

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