HCs not custodian of income: SC stays order halting refund

“A excessive court docket is just not the custodian of the income (division). It is a wierd order. How can the excessive court docket subject such an order after saying that it doesn’t have the jurisdiction to entertain the matter?” a bench of Justices Ujjal Bhuyan and Manmohan stated whereas listening to a plea filed by Tenormac Enterprises Pvt Ltd, the corporate entitled to the refund as per an earlier tribunal ruling.

In its June 12 ruling, the Bombay High Court admitted in its personal ruling that neither the Revenue (Department’)s statutory attraction nor the writ petition difficult the refund order was maintainable earlier than it. Yet, it went on to remain the implementation of the order handed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

The Supreme Court took exception to this, stating that even the Union authorities should adhere to authorized cures laid down by statute. “We are following the rule of legislation. Just as a result of you’re the Union of India, you can not go right here and there and get a keep. Courts should move orders correct in legislation,” the bench remarked.

Senior advocate Rafiq Dada, representing Tenormac, strongly opposed the excessive court docket’s intervention, calling the keep unjustified. Additional Solicitor General SD Sanjay, showing for the Revenue Department, tried to underline the stakes concerned: “Here the query is about over ₹200 crore,” he instructed the court docket.

But the bench remained agency: “The excessive court docket stated it’s not on the quantum however it ought to defend the curiosity of the income (division). This order is towards all canons of legislation. The excessive court docket is anticipated to move correct orders.”

The court docket additionally requested the federal government to clarify why it had not approached the Supreme Court immediately after the CESTAT handed its order on January 24, 2025. “What prevented you from submitting an attraction earlier than this court docket?” the bench requested.

In its interim order, the Supreme Court stayed the Bombay excessive court docket’s June 12 ruling and clarified that the Revenue Department is free to pursue its attraction earlier than the apex court docket, which has correct jurisdiction to look at issues involving the speed of responsibility or valuation. The case might be heard once more on July 2.

The dispute arose from orders handed by the CESTAT in favour of Tenormac Enterprises. On January 24, the tribunal allowed the corporate’s attraction, and on May 6, it directed the Revenue Department to course of a money refund of ₹256.45 crore. The Bombay excessive court docket was approached by the Commissioner of CGST & Central Excise, Belapur, via a writ petition and a statutory attraction underneath Section 35G of the Central Excise Act.

However, the excessive court docket itself famous that for the reason that points concerned fee of tax and valuation, it lacked jurisdiction underneath Section 35G, and the attraction ought to go immediately earlier than the Supreme Court underneath Section 35L. It additionally agreed that the May 6 refund directive was merely a consequential order made underneath Rule 41 of the 1982 Tribunal Rules, giving impact to the sooner judgment.

Still, acceding to the federal government’s request for interim safety, the excessive court docket stayed the refund for eight weeks to permit the Revenue Department to strategy the apex court docket, noting that recovering the sum could possibly be tough if it was disbursed and the Revenue Department later succeeded on attraction. The court docket additionally recorded that Tenormac had ceased operations, elevating considerations concerning the means to recuperate the quantity if wanted.