Jharkhand HC: Retaining Excess Tax After Demand Reduction Violates Articles 14 and 265

The Jharkhand High Court mentioned that retaining the balance amount by the department after the tax demand is reduced constitutes a breach of Article 14 and Article 265 of the Constitution.

It was noted by the Division Bench of Chief Justice M.S. Ramachandra Rao and Justice Deepak Roshan that the department could not hold the amounts deposited via the taxpayer as per the norms levied via the appellate authority for the stay of the assessment order and claimed that no need to refund the same is there.

The assessment orders in the same matter were passed, and a demand notice was issued to the taxpayer/applicant, which was contested via the taxpayer u/s 79 of the Jharkhand VAT Act.

The assessing officer has been urged by the taxpayer to pass a fresh assessment order, and these orders were passed, lessening the tax obligation of the taxpayer.

Therefore, the fresh assessment order after the remand was also passed, repeating that the tax amount is due from the taxpayer again without providing the credit before the amount deposited already via the taxpayer at the time when it filed a plea.

Even after various reminders furnished via the taxpayer, the deposited amount via it during filing the plea post-tax deducting, therefore, the demand was not refunded via the department.

The taxpayer asked for the direction of the department/respondents to refund the excess tax amount deposited at the time of the appellate proceedings.

The bench mentioned 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 asked the department to refund the amounts deposited via the taxpayer, post adjusting it for the tax finally assessed after the remand via the assessing authority.