TMI Blog2009 (7) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... icer responsible for causing delay so that the State exchequer may not suffer further - Writ Petition No. 4977 of 2009 - - - Dated:- 24-7-2009 - ANIL R. DAVE C.J. AND RAMESH RANGANATHAN , JJ. ORDER:- The order of the court was made by ANIL R. DAVE C.J. The short question involved in this petition is whether the respondent-authorities have unfettered right to withhold the amount payable to the petitioner by way of refund under the provisions of section 40(2) of the Andhra Pradesh Value Added Tax Act, 2005 (hereinafter referred to as the APVAT Act ). The facts, which are not in dispute, are as under: By virtue of an order dated November 28, 2007 passed in T.A. No. 1142 of 2007 by the Andhra Pradesh Sales Tax Appellate Tribunal, Hyderabad (for short, the STAT ), a sum of Rs. 14,52,29,260, has become payable to the petitioner. As the said amount was not refunded to the petitioner by the respondent-authorities, the petitioner was constrained to file Writ Petition No. 14312 of 2007 before this court praying for a direction to the respondent-authorities for refund of the aforestated amount. After hearing the concerned advocates, this court, by an order dated June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner must be paid by the respondent-authorities. The learned Senior Advocate has relied upon the judgment delivered by this court in Andhra Pradesh State Road Transport Corporation v. Commissioner of Income-tax [1975] 100 ITR 401. It has been submitted by him that though the said case relates to the provisions of the Income-tax Act, this court has observed in the said judgment that the power conferred on the Income-tax Officer for withholding the amount of refund and interest thereon is not absolute. The officer must be satisfied that the interest of the Revenue would suffer by granting refund of amount, and only in that event, the amount of refund can be withheld. In the instant case, according to the learned Senior Advocate, the petitioner has succeeded before the STAT and, therefore, without any justifiable reason, the amount payable to the petitioner by way of refund cannot be withheld by the respondentauthorities. Similarly, the learned Senior Advocate has relied upon the judgment delivered in Leader Valves Pvt. Ltd. v. Commissioner of Income-tax, Jullundur [1987] 167 ITR 542 (P H); [1987] Tax LR 814. In the said judgment, Punjab and Haryana High Court has held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s if the amount of refund is paid to the petitioner now. It has been further submitted by the learned Standing Counsel that payment of such a huge amount of refund along with interest thereon would adversely affect the State exchequer. It has been submitted by the learned Standing Counsel that if the State is called upon to pay such a huge amount at this juncture, especially when the respondent-authorities are hopeful of succeeding in the TRC, the Revenue would surely be adversely affected. In the circumstances, after previous approval of the Commissioner of Commercial Taxes, the amount of refund has been rightly withheld by the respondent-authorities. Looking to the quantum of the amount of refund, as per rule 59 of the APVAT Rules, approval of the Commissioner of Commercial Taxes was obtained though section 40(2) of the APVAT Act requires approval of the Deputy Commissioner. The learned Standing Counsel has referred to and relied upon the judgment of this court in Andhra Pradesh State Road Transport Corporation v. Commissioner of Income-tax [1975] 100 ITR 401. The law laid down in the said judgment is to the effect that if the Income-tax Officer is satisfied that interest of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty was originally due. It is true that as per the provisions of section 40(2) of the APVAT Act (which is pari materia to that of section 33C of the APGST Act, which has now been repealed), the respondent-authorities have power to withhold payment of refund. The said power has to be exercised after obtaining approval of the Deputy Commissioner. Though section 40(2) of the APVAT Act empowers the concerned authority to withhold the amount of refund, such power is not an unfettered power vesting with the concerned officer of the Revenue. Once the said power is given to an authority, such power has to be exercised with discretion. There must be sound reasons for which the amount payable to an assessee-citizen is to be withheld. If one reads the provisions of section 40(2) of the APVAT Act, which has been reproduced hereinabove, it clearly says that . . . the authority prescribed is of the opinion that the grant of the refund is likely to adversely affect the Revenue . . . (emphasis Here italicised. added). Thus, before exercising the power to withhold payment of refund under the provisions of section 40(2) of the APVAT Act, the concerned authority including the Deputy Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's money, i.e., the refund. To get refund is the right of the assessee because that is the amount belonging to the assessee as per the verdict of an authority established by law and, therefore, without justifiable reason, the Revenue cannot withhold the payment of refund. The Deputy Commissioner must come to the conclusion that by not withholding the amount of refund, the State would be adversely affected because the State might not be in a position to recover the said amount. If the assessee is doing well in business for several years, is having sufficient assets and when there is no possibility of the assessee vanishing into thin air without making payment of tax, in our opinion, the Deputy Commissioner cannot give his approval for withholding the refund. In any case, the Deputy Commissioner must record reasons before granting approval so that in the event of the decision of the Deputy Commissioner being challenged, the higher authority or the concerned court can look into the justification given by the Deputy Commissioner for giving an opinion for withholding payment of the amount belonging to the assessee. In the instant case, the concerned authorities including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect nexus between the material coming to his notice and the formation of his opinion. In Rohtas Industries Ltd. v. S.D. Agarwal [1969] 39 Comp Cas 781; AIR 1969 SC 707, the honourable Supreme Court has held that the authority must be exercised honestly and not for corrupt or ulterior purposes. The authority must form the requisite opinion honestly and after applying its mind to the relevant material before it; it must act reasonably and not capriciously or arbitrarily. In the recent judgment in the case of Mahender Pal v. State of Haryana Civil Appeal No. 3604 of 2009, decided on May 15, 2009, the honourable Supreme Court has held that existence of foundational facts is the sine qua non for formation of an opinion and such an objective satisfaction must be based on an objective criteria; ipse dixit on the part of the State would not serve the purpose. In the instant case, there is no reference to the material which the Commissioner of Commercial Taxes had perused. If there is no material with him with regard to the apprehension of the State of not recovering the amount of refund from the petitioner assessee, so as to adversely affect the State exchequer, the opinion fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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