The invisible CPC often indulges in the instantaneous recovery of demands against hard-earned refunds of the assessee without meeting the objections made by assessee.
Imposing costs of Rs. 10000 the Telangana High Court in [2021] 431 ITR 654 (Telangana) directed the CPC to refund a sum of Rs. 1,06,06,740 and Rs. 6,25,70,390, after deducting a sum of Rs. 54.78 lakhs which is refunded already to the petitioner, with interest at 15 percent. per annum from the dates of adjustment of the said amounts till the date of payment within four (04) weeks from the date of receipt of a copy of the order.
The refunds were adjusted in this case even when the stay was obtained upon 20% payment. Moreover, such adjustment was made even before the expiry of 30 days fixed under the notice of intimation under section 245 and even giving let go to the online reply and objections submitted by the assessee.
Upon their reference to Office Memorandum F. No. 404/72/93-ITCC dated February 29, 2016, the High Court stressed the following as prerequisites/conditions before invoking section 245 of the Act:
- giving of prior intimation in writing about the proposed adjustment of refund;
- The satisfaction that the assessee would not be in a position to satisfy the demand of tax; and
- that but for the set-off, the outstanding tax cannot be recovered at all.
In their further remark the Court pointed out that once an absolute stay of recovery of demand of tax is granted to the assessee, it is improper and inappropriate for the Revenue to recover the money through adjustment of refunds. A stay order passed by an appellate or higher authority must be respected and no deviancy or breach should be made.
In all the adjustments are held as illegal.