[ad_1]
Bombay High Court
Fcbulka Advertising Pvt Ltd vs Assistant Commissioner Of Income Tax … on 7 May, 2025
Author: M.S. Sonak
Bench: M.S. Sonak
SAYYED Digitally
by SAYYED
signed
SAEED SAEED
2025:BHC-OS:7667-DBALI
AHMED ALI
ALI Date: FINAL1.WP.3442.22(J)-2.DOCX
AHMED 2025.05.07
15:09:48
ALI +0530
Revati
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.3442 OF 2022
Fcbulka Advertising Pvt Ltd. ... Petitioner
4th Floor Nirmal, Nariman Point,
Mumbai - 400 021.
Versus
1. Assistant Commissioner of Income ... Respondents
Tax Circle 16(1)
Aayakar Bhavan, Maharishi Karve
Road, Mumbai 400 020
2. Principal Commissioner of Income
Tax-8
Aayakar Bhavan, Maharishi Karve
Road, Mumbai 400 020
3. Union of India
through the Secretary,
Department of Revenue, Ministry
Of Finance, 2nd Floor, Aayakar
Bhavan, M.K.Marg,Mumbai 400020
___________________________________________________
Mr J. D. Mistri, Senior Advocate a/w Mr Gautam Thakkar and
Mr Sameer Dalal, for Petitioner.
Mr Tejinder Singh, Special Counsel a/w Mr Suresh Kumar, for
Respondents/Revenue.
______________________________________________________
CORAM : M.S. Sonak &
Jitendra Jain, JJ.
RESERVED ON: 23 April 2025
PRONOUNCED ON : 7 May 2025
Judgment (Per Jitendra Jain, J.):-
1. Rule. By consent, and since the pleadings are complete,
this petition was taken for a final hearing at the admission
stage itself.
Page 1 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
2. By this petition under Article 226 of the Constitution of
India, the Petitioner is challenging the communication dated
16 June 2022 issued by Respondent No.1, which refused the
Petitioner's request to implement the communication dated
29 November 2018 relating to the refund. The present
petition pertains to assessment year (AY) 2018-2019.
Brief facts: -
(i) The Petitioner engages in advertising and marketing
communications in India and is a wholly owned
subsidiary of Advertisement and Communication Services
(Mauritius) Limited (ACSL Mauritius). Additionally, the
Petitioner serves as the holding company of FCB
Interface Communications Private Limited, which is
incorporated in India.
(ii) During the previous year relevant to the AY 2018-2019,
Petitioner declared and paid a dividend of Rs .
205,17,52,200/- to its shareholder ACSL Mauritius. The
Petitioner paid Dividend Distribution Tax (DDT) of Rs.
27,47,97,292/- under Section 115-O of the Income Tax
Act, 1961 (the Act) at an effective rate of 20.358%.
(iii) Subsequently, the Petitioner claims to have realized that
DDT paid at 20.358% was erroneous since, as per Article
10(2) of the Treaty between India and Mauritius, they
should have paid tax @ 5% only.
(iv) Therefore, on 10 October 2018, claim for refund of
excess DDT was made by a letter addressed to
Page 2 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
Respondent No.1. In the said letter, the Petitioner
submitted that they were liable to pay DDT as per India-
Mauritius Tax Treaty @ 5% only, however, they have paid
DDT @ 20.358% and, therefore, they are entitled to
claim refund of the excess DDT of Rs.20,73,06,062/-.
The Petitioner also stated that Form ITR-VI does not have
any provision for a claim of refund of excess DDT;
therefore, the claim is made by way of said letter. The
Petitioner also requested the opportunity for a hearing in
the said letter.
(v) On 29 November 2018, Respondent No.1 replied to the
Petitioner's aforesaid refund claim. The claim for grant of
refund in the present petition is based on the said letter
and, therefore, for convenience, is reproduced herein: -
Page 3 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
(vi) Thereafter, the Petitioner vide various letters requested
and reminded Respondent No.1 to grant the refund
along with interest based on the above communication
dated 29 November 2018. However, there was no reply
to these letters.
(vii) However, on 16 June 2022, Respondent No.1 replied to
the aforesaid request of the Petitioner and rejected the
claim of the refund on the ground that reply dated 29
November 2018, based on which the refund is requested,
is not a statutory order passed under the relevant Section
of the IT Act and, therefore, effect cannot be given to
such communication of 29 November 2018. It further
states that no section is mentioned in the communication
dated 29 November 2018 under which the same is
passed, and no computation sheet is attached.
(viii) The said communication of 16 June 2022, which is
impugned in the present petition, requested the
Petitioner to file rectification application under Section
154 of the IT Act specifying the order which is to be
rectified for arriving at the refund or to claim the refund
under Section 237 of the IT Act along with supporting
documents.
(ix) For the sake of convenience, the impugned
communication dated 16 June 2022 is scanned
hereunder: -
Page 4 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
Page 5 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
3. Being aggrieved by the communication dated 16 June
2022, the Petitioner has instituted the present petition
challenging its correctness and further seeking direction to
the Respondents to grant a refund in terms of the
communication dated 29 November 2018, along with
interest.
Submissions of the Petitioner:-
4. Mr. Mistri, learned senior counsel for the Petitioner,
submitted that the communication dated 29 November 2018
constitutes satisfaction of Respondent No.1 in terms of
Section 237 of the IT Act, in which Respondent No.1 has
determined the refund of Rs. 20,73,06,062/-. He submits that
this communication is an order determining the refund. The
communication dated 29 November 2018 still holds the field
since it is neither withdrawn nor revised by any authority. He
Page 6 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
challenges the communication dated 16 June 2022 on the
ground that no statutory orders are required for determining
refund under Section 237 of the IT Act. He strongly refuted
the grounds mentioned in the impugned communication for
denying the implementation of the communication dated 29
November 2018. He submitted that Respondent No.1 cannot
direct the Petitioner to make an application under Section
154 of the IT Act for rectification of the letter dated 29
November 2018. He submitted that the letter dated 10
October 2018 is an application for Section 237 of the IT Act
or, alternatively, Article 265 of the Constitution of India.
5. Mr. Mistri also submitted that the Petitioner is entitled
to the refund since under the Treaty between India and
Mauritius, the Petitioner was required to pay DDT @ 5% only
and not @ 20.358%. He submitted that the submission on
merits is being made only in response to the Respondents'
reply during the hearing. He, however, maintains that it is too
late for the revenue to challenge the entitlement of the
Petitioner after having determined the refund by letter dated
29 November 2018. He submitted that the revenue today
cannot contend in the teeth of the refund determination on
29 November 2018 that the Petitioner is not entitled to claim
the refund.
6. Mr. Mistri also submitted that filing the return of
income is not required for DDT refunds, and the Petitioner
specifically brought this to the attention of Respondent No.1
while claiming a refund of excess DDT. In any case, the claim
Page 7 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
made by a letter dated 10 October 2018 must be treated as an
application under Section 237 of the IT Act.
7. The learned senior counsel submitted that the prayer
for refund is based on Article 265 of the Constitution of India
and the communication dated 29 November 2018. He
submitted that the amount is being retained without any
authority of law and therefore seeks appropriate relief in the
present petition. He further submitted that the Respondents
are not justified in the present petition to deny the refund
based on the India-Mauritius Tax Treaty. He submitted that
the grounds raised in the reply did not constitute the basis of
the communication dated 16 June 2022, which is impugned
in the present proceedings. He further submitted that the
issue on the merits is pending before various forums in the
case of various other assesses. Therefore, he submitted that it
would not be appropriate for this Court to adjudicate the
issue on the merits, more so when the same does not
constitute the basis of the impugned letter dated 16 June
2022. Mr. Mistri, learned senior counsel, relied upon the
decision of the Gujarat High Court in the case of Torrent (P.)
Ltd. Vs Commissioner of Income-tax1
Submissions of the Respondents:-
8. Mr. Singh learned special counsel for the Respondents
vehemently opposed the petition and submitted that sine-qua-
non for claiming a refund is that the assessee should file its
return and make a claim in the said returns. He relied upon
1
(2013) 35 taxmann.com 300 (Gujarat)
Page 8 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
Section 239 read with Rule 41 to support this submission. He
submitted that the Petitioner in their return of income did not
make any claim for the refund of the DDT. He further
submitted that the Petitioner did not protest the intimation
under Section 143(1) and assessment order under Section
143(3) of the IT Act by raising a plea that the Respondents
have not granted the refund of DDT based on the
communication dated 29 November 2018. Mr. Singh further
placed reliance on Article 10 of the India-Mauritius Tax Treaty
and Commentaries to submit that the Petitioners are not
entitled to the refund of the excess DDT by taking recourse to
the Treaty.
9. Mr Singh placed reliance on the decision of Godrej &
Boyce Mfg. Co. Ltd. vs DCIT2 in support of his submissions on
the Petitioner's disentitlement to claim such a refund. Mr.
Singh also relied upon the decision of the Hon'ble Supreme
Court in the case of Union of India Vs Azadi Bachao Andolan 3
and Karnataka High Court's decision in the case of CIT Vs
R.M. Muthaiah4. Mr. Singh also placed reliance on the
Commentaries on the Interpretation of the Treaty and
submitted that the Petitioners are not entitled to claim a
refund of the DDT. Mr. Singh also relied upon the decision of
this Court in the case of Tata Communications Transformation
Services Ltd. Vs Assistant Commissioner of Income-tax5 and
2
(2010) 194 taxman 203 (Bombay)
3
(2003) 132 Taxman 373 (SC)
4
(1993) 202 ITR 508 (KAR)
5
(2022) 137 taxmann.com 2 (Bombay)
Page 9 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
submitted that since the claim is not made in the return as
per the requirement of Section 239 of the IT Act, the
Petitioner is not entitled to the refund of the DDT.
10. Mr Singh further submitted that the communication
dated 29 November 2018 is not an order but a reply to the
refund application dated 10 October 2018 filed by the
Petitioner. He submitted that the letter states that the refund
is due upon preliminary verification and will be taken up for
further processing. He submitted that the letter is more like
an opinion and not a conclusive refund determination. He
defended the Respondents' action and prayed for the
petition's dismissal.
11. We have heard the learned counsel for the Petitioner
and Respondents and, with their assistance, have perused the
documents that were brought to our attention. Other than
what is recorded above, no other submissions have been
made by the parties.
Analysis and Conclusion: -
12. Based on the rival contentions and pleadings, broadly
the following three issues arise for determination in this
Petition: -
(i) The validity of the impugned communication dated 16
June 2022;
(ii) The legal status of the communication dated 29
November 2018; and
Page 10 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
(iii) Whether a case is made out for the issue of a writ of
mandamus to the Respondents for the grant of a refund of Rs.
20,73,06,062/- solely based on the communication dated 29
November 2018?
13. The impugned communication dated 16 June 2022
rejects the Petitioner's claim for refund inter alia on the
ground that previous communication dated 29 November
2018 is not a statutory order of refund made under any of the
provisions of the IT Act but it is just the expression of the
tentative opinion in response to Petitioner's application for
refund which was not even made in the statutory form or
after complying the statutory procedures under Sections 237
and 239 of the IT Act. This impugned communication rejects
the refund claim on the ground that the earlier
communication dated 29 November 2018 was not some order
under Sections 143(3)/154/250/254/143(1), etc. The
impugned communication also reasons that the
communication dated 29 November 2018 did not specify the
Sections under which it was issued, nor was any computation
sheet annexed thereto. The impugned communication finally
directs the Petitioner to file a rectification application under
Section 154 or to take out proceedings under Section 237 of
the IT Act, claiming a refund.
14. Apart from the above reasons reflected in the impugned
communication dated 16 June 2022, Mr. Tejinder Singh urged
that refund was rejected because the Petitioner failed to file a
return of income and claim such refund, which according to
Page 11 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
him, was the only mode allowable under Section 237 read
with Sections 237 and 239 read with Rule 41 of the Income
Tax Rules. He submitted that even on merits, the Petitioner
was not entitled to any refund under the Double Tax
Avoidance Agreement between India and Mauritius. He
emphasised Article 10 of the India-Mauritius Tax Treaty and
relied on the decisions of Godrej & Boyce Mfg. Co. Ltd.
(supra) and Azadi Bachao Andolan (supra) in support of his
contentions.
15. At the outset, we are unsure whether it is open to the
Revenue or Mr. Singh to urge reasons or grounds other than
those reflected in the impugned communication dated 16
June 2022 to support the said impugned communication.
Normally, the validity of such communications would have to
be tested on the grounds or reasons reflected therein and not
by grounds added or supplemented through affidavits or oral
contentions when a challenge is raised to such
communications.
16. We state our uncertainty because an argument was
made on behalf of the revenue that even the impugned
communication dated 16 June 2022 may not be a statutory
order rejecting the Petitioner's claim for refund. Furthermore,
the impugned communication is more of a response to the
Petitioner's reminders concerning the implementation of the
communication dated 29 November 2019. Mr. Mistri,
however, maintained that the impugned communication was
Page 12 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
a statutory order and that the reasons provided could not be
supplemented when a challenge was presented against it.
17. In any event, upon considering the matter from the two
different perspectives presented before us, for reasons
discussed later, we are satisfied that the Petitioner's refund
claim cannot be said to have been finally rejected or the
Respondents cannot finally reject the Petitioner's refund claim
based on the grounds in the impugned communication dated
16 June 2022 the grounds attempted to be supplemented
later. In either event, the impugned communication is
vulnerable and warrants interference.
18. Firstly, the principles of natural justice and fair play
were not complied with before the issuance of the impugned
communication dated 16 June 2022. The petitioner was not
heard prior to the issuance of the impugned communication
dated 16 June 2022. The tentative reasons why the
respondents believed that no refund was due to the petitioner
were not disclosed to her. The petitioner was not given an
effective opportunity to address these tentative grounds or
reasons. This constitutes a valid basis for setting aside the
impugned communication dated 16 June 2022.
19. Secondly, nothing in the impugned communication
suggests that the rejection was based on the Respondents'
belief that no refund was due and payable to the Petitioner.
As discussed later in the context of the communication dated
29 November 2018, there is nothing conclusive regarding the
Page 13 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
Petitioner's entitlement to such a refund after the authority
verified the Petitioner's status regarding the claim made and
the provisions of the treaty.
20. The impugned communication mainly states that the
communication dated 29 November 2019 was not a statutory
order; therefore, based on the same, any claim for refund
cannot be allowed. This means that even the impugned
communication does not examine the Petitioner's claim for
refund on merits and takes any stand that the petitioner was
dis-entitled to a refund on merits.
21. Thus, the impugned communication, while rejecting the
Petitioner's contention that the issue of refund stood
concluded by the communication dated 29 November 2018,
does not independently decide one way or the other on the
merits of the Petitioner's claim for refund. Even the
supplemented grounds urged in the revenue's affidavit or by
Mr. Singh during the arguments mainly concern alleged non-
compliance with procedural requirements or the non-citation
of statutory provisions. But there is no examination of the
refund claim on merits by adverting to the transaction and
the corresponding provisions of the treaty by which they were
governed.
22. At this stage, considering the order we propose to make,
we refrain from delving deeply into contentious issues
affecting the merits or demerits of the refund claim. Such
issues, according to us, must initially be examined by the fact-
Page 14 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
finding authorities under the IT Act and not this Court
exercising judicial review. When exercising powers of judicial
review, this Court is mainly concerned with the decision-
making process rather than the decision itself.
23. Therefore, examining the matter from the above
perspectives, and for the reasons discussed above, we are
satisfied that the impugned communication dated 16 June
2022 must be set aside. We answer the first issue accordingly.
24. The next issue that needs consideration concerns the
legal status of the communication dated 29 November 2018.
25. Admittedly, on a perusal of the communication dated
29 November 2018, there is no mention of any Section under
which it was issued. However, merely because there is no
reference to the Section under which the said communication
was issued cannot be reason enough to conclude that it is not
a statutory order. The reference to a section or provision is
also inconclusive on such an issue. Neither did the Petitioner
quote any specific section, article or legal provision when
applying for a refund, nor does the communication dated 29
November 2018 quote any in response.
26. Mr. Mistri contended that the Petitioner's application
seeking a refund was not required to be made in any specified
format. He reasoned that under Article 265 of the
Constitution, no tax could be levied without the authority of
law. Therefore, if the Petitioner had paid tax that was not due
and payable, the retention of such amount would amount to a
Page 15 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
levy, collection, or retention of tax without the authority of
law. He submitted that the right to secure the refund of such
tax, which the Revenue was not entitled to retain, could never
be fettered by some procedural requirements. He submitted
that there was no requirement to file a return of income
under such circumstances. By reference to the prescribed
forms, he submitted that there was no provision in the forms
to seek a refund in the situation in which the Petitioner was
placed.
27. Since both the Counsel advanced arguments on the
provisions in Sections 237, 240 and 246 (A)(1)(i) of the IT
Act in the context of the communication dated 29 November
2018, we refer to them:
"237. If any person satisfies the [Assessing] Officer
that the amount of tax paid by him or on his behalf or
treated as paid by him or on his behalf for any
assessment year exceeds the amount with which he is
properly chargeable under this Act for that year, he
shall be entitled to a refund of the excess.
240. Where, as a result of any order passed in
appeal or other proceedings under this Act, refund of
any amount becomes due to the assessee, the Assessing
Officer shall, except as otherwise provided in this Act,
refund the amount to the assessee without his having
to make any claim in that behalf.
Provided that where, by the order aforesaid-
a) An assessment is set aside or cancelled and an
order of fresh assessment is directed to be made, the
refund, if any, shall become due only on the making of
such fresh assessment;
b) the assessment is annulled, the refund shall become
due only of the amount, if any, of the tax paid in excess
of the tax chargeable on the total income returned by
the assessee.
Page 16 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
246A. (1) Any assessee [or any deductor] [or any
collector] aggrieved by any of the following orders
(whether made before or after the appointed day) may
appeal to the Commissioner (Appeals) against -
......
(i) an order made under section 237;"
28. Mr Mistri would elevate the communication dated 29
November 2018 to the status of a statutory order recording
the AO's satisfaction under section 237, stating that the
refund was conclusively due to the Petitioner, while Mr Singh
refutes this altogether.
29. Section 237 of the IT Act provides that if a person
"satisfies" the Assessing Officer that the amount of tax paid by
him exceeds the amount with which he is properly chargeable
under this Act for that year, he shall be entitled to a refund of
the excess. In the instant case, the Petitioner made the claim
for the refund of DDT on 10 October 2018, and it was
specifically stated that such a claim is made because there is
no provision in Form ITR-VI to claim a refund of DDT.
Respondents have neither disputed the non-provision in the
ITR form to claim a refund of DDT till the filing of the reply
to this petition, nor is it the basis which can be found in the
impugned communication dated 16 June 2022.
30. Section 237 of the IT Act requires "satisfaction" of the
Assessing Officer that the amount paid is more than what is
chargeable under the Act and, therefore, the person is
entitled to a refund of the excess. Such an important
"satisfaction" must be an unequivocal and final determination
Page 17 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
after proper adjudication on the application made by an
assessee for the refund. Furthermore, such "satisfaction" must
be in writing by way of an order in which the Assessing
Officer must give his reasons for either accepting or rejecting
the refund claim. This is necessary because there should be
no ambiguity on whether the AO was passing some statutory
order capable of legal consequences or was merely expressing
his tentative opinion or responding to the refund claim
application.
31. We say that such satisfaction must be formally
expressed because neither party should be kept guessing or
be prejudiced in resorting to the remedies that the law
provides against such determination. For instance, Section
246A of the IT Act provides for appealable orders before the
Commissioner (Appeals) and Section 246A (1)(i) of the IT
Act refers to an order made under Section 237 of the IT Act
as an appealable order.
32. Therefore, since the adjudication/ determination of the
entitlement under Section 237 of the IT Act is an appealable
order, it follows that there must be a written communication
in which there is a final determination of the entitlement or
disentitlement supported by reasoning so that the appellate
authority can test it. Therefore, in our view, there must be an
"order" under Section 237 of the IT Act. Such an order must
be a conclusive and final determination of the entitlement or
disentitlement to a refund of the excess amount paid. The
emphasis need not be on the form or citation of the relevant
Page 18 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
legal provision. But the essential attributes of conclusiveness
must be reflected. The parties must know that a formal
determination of the refund claim was being considered and
dealt with, so that all aspects could be pointed out and
considered. In this case, the order at least tentatively supports
the Assessee, but the shoe could as well be on the other foot
on some other occasion. On perusal of the communication
dated 29 November 2018 and on considering the
circumstances in which it was made, we find it challenging to
elevate it to the status of a statutory order recording the
satisfaction contemplated by Section 237 of the IT Act.
33. Article 265 of the Constitution of India also provides
that no tax shall be levied or collected except by authority of
law. The phrase "authority of law" would mean
liability/entitlement as per the Act. This would contemplate
that before a person can be entitled to a refund, the Assessing
Officer must satisfy that such an entitlement is in accordance
with the provisions of the IT Act, and there must be a final
determination of the correctness of the claim for refund.
Based upon an inconclusive or tentative opinion of an AO, no
breach of Article 265 can be alleged or established.
34. The communication dated 29 November 2018 in the
first paragraph states that the claim of refund has been
considered by Respondent No.1. In paragraph 2, the details of
the dividend paid and received are stated. In paragraph 3,
Respondent No.1 records that the Petitioner has made a claim
that dividend income paid to ACSL Mauritius "should be
Page 19 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
circumscribed @ 5% as per Article 10 of the India-Mauritius
Tax Treaty" and such a claim has been examined and found
correct. However, after stating so, Respondent No.1 has
qualified by stating that the refund "due" is on "preliminary
verification determined at Rs . 20,73,06,062/-" and further
the refund would be taken up for "processing" and issued
after adjustment of past demands, if any. This is hardly
conclusive.
35. If the communication dated 29 November 2018 is an
order, it being like a preliminary, prima facie, or interlocutory
order and not a final order, the Petitioner cannot base their
claim on this communication to allege breach of Article 265
of the Constitution. The communication dated 29 November
2018 is based on preliminary verification and is subject to
processing, and therefore, it is in the nature of a
preliminary/prima facie/interlocutory order. Respondent No.1
should and ought to have passed a final order so that there
would be no ambiguity on the issue, and such a
determination would be capable of legal consequences,
including resort to remedies under the law. Article 265 cannot
be invoked relying almost entirely on such communication,
which is based on preliminary verification and further
processing.
36. An "order" to be treated as such must decide matters
affecting the valuable rights of an Assessee and should satisfy
the requirement of finality, which is absent in the
communication dated 29 November 2018. The said
Page 20 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
communication dated 29 November 2018 is not a command
or direction authoritatively given for the grant of a refund. An
order based on which a claim for refund is made should
conclusively find that the refund is "due," thereby putting the
issue of entitlement to rest. Suppose the claim relies entirely
on a document based on preliminary verification and further
processing. In that case, it cannot be said that the refund is
due to such a claimant, and it is being withheld in breach of
Article 265 of the Constitution of India.
37. In our view, the communication dated 29 November
2018 cannot be read by picking up one sentence in isolation,
but would have to be read in its entirety, not ignoring the
context. On a holistic reading of the entire communication
dated 29 November 2018, what appears to have been said by
Respondent No.1 is that the determination of refund is based
on preliminary verification and is subject to further
processing. The communication dated 29 November 2018
appears to be akin to an interlocutory/ preliminary order
wherein a prima facie view is expressed by Respondent No.1
on the issue of refund. However, the communication dated 29
November 2018 cannot be treated as a final and conclusive
determination of the entitlement of the Petitioner to the
refund. This is because Respondent No.1 states that on
preliminary verification, the refund is determined at Rs .
20,73,06,062/-, and further it states that the same would be
taken up for processing.
Page 21 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
38. The sentence "the claim has been examined and found
correct" cannot be read in isolation de hors the subsequent
statement, which states that the refund due on preliminary
verification is determined at Rs . 20,73,06,062/- and the
same would be taken up for processing.
39. Communication dated 29 November 2018 should have
been followed up by Respondent No.1 by issuing a final and
conclusive order. In this instance, Respondent No.1 has not
taken any steps after the communication dated 29 November
2018 to verify the refund claim. The delay on the part of
Respondent No.1 in carrying out the verification and passing
a final and conclusive determination through an order cannot
be attributed to the Petitioner. However, because such an
exercise was not performed by Respondent No.1, the
communication dated 29 November 2018 cannot be regarded
as a final determination culminating in an order as
contemplated under Section 237 read with 246a of the IT
Act. If, upon final determination, a refund is found
conclusively due, surely interest can be awarded to the
Petitioner.
40. Section 237 of the IT Act refers to the phrase "satisfied".
The phrase satisfaction means fully and conclusively satisfied
and not a prima facie satisfaction. On a reading of
communication dated 29 November 2018, it cannot be said
that Respondent No.1-Assessing Officer was fully satisfied
with the entitlement of the Petitioner to the refund. This is so
because the said communication specifically states that it is
Page 22 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
based on preliminary verification and is subject to further
processing. Therefore, in our view, the communication dated
29 November 2018 cannot be treated as meaning that the
Assessing Officer is satisfied as contemplated under Section
237 of the IT Act to the entitlement of the refund.
Furthermore, since it is in the form of interlocutory/
preliminary/prima-facie communication, the same also
cannot be considered an "order". The reading of the
communication dated 29 November 2018 would only mean
that prima facie, Respondent No.1 found the claim to be
correct on preliminary verification.
41. There is no dispute that Respondent No.1 has the
authority to pass a final order granting a refund. This would
encompass preliminary, or prima facie, orders, and such
orders are subject to verification and statutory limitations.
The initial or prima facie orders are provisional and tentative
but do not constitute final adjudication and can be modified
upon detailed examination. This communication, dated 29
November 2018, cannot be construed as a final adjudication
order accepting the Petitioner's plea for the refund claim.
42. In our view, therefore, since the communication dated
29 November 2018 does not specify conclusively the
entitlement of the Petitioner to the refund claim, it cannot be
considered as a final determination culminating in a final
"order" under Section 237 of the IT Act admitting the
entitlement to a refund of the excess DDT. However, we
disagree with the reasoning in the impugned communication
Page 23 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
dated 16 June 2022 which states that since there is no
mention of the Section in the communication dated 29
November 2018, the same does not constitute an order. Mere
non-mentioning of any section would not mean that a
communication finally determining the rights and liabilities of
an Assessee cannot be treated as an order. However, there is
no final determination in the instant case, and therefore, the
essential attribute of a conclusive order is missing.
43. We agree with Mr. Mistri, learned counsel for the
Petitioner, that the issue of whether DDT is covered by the
provisions of the Double Taxation Avoidance Agreement is
pending in the cases of other Assessee before various forums
across the country, including this Court. Therefore, it would
not be appropriate for us to delve into this issue for the first
time and embark upon deciding the issues of eligibility or
entitlement to a refund under the treaty for the first time.
44. We have not dealt with case laws relied upon by both
parties since, in the present factual scenario, keeping in mind
the controversy before us and our view, they are not
applicable. The case laws mainly relate to the merits of the
entitlement to a refund, which is an issue we are not
presently deciding on.
45. The second issue concerning the status of
communication dated 29 November is decided in the above
terms. The said communication cannot be regarded or
Page 24 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
elevated to the status of some statutory order conclusively or
finally determining the issue of refund entitlement.
46. Finally, the question is whether the Petitioner has made
out a case for the issue of a writ of mandamus for the grant of
a refund of Rs. 20,73,06,062/- solely based on the
communication dated 29 November 2018.
47. Having regard to the legal status of the communication
dated 29 November 2018, obviously, based on the
communication dated 29 November 2018, no mandamus can
be immediately issued directing refund of the amount of Rs .
20,73,06,062/-. Some Competent Authority would have to
conclusively determine issues of eligibility and entitlement for
refund, examine the merits of the contention based upon
which the refund is applied, and pass an appropriate order on
the refund issue. Such an order will no doubt have to be
made after giving the Petitioner full opportunity and
considering all relevant material, including the transactions
and the treaty's provisions. Since in this case, there is no final
determination that refund was indeed due and payable to the
Petitioner, no case is made out for the issue of writ of
mandamus to direct the Respondents to refund the amount of
Rs . 20,73,06,062/- to the Petitioner based solely on the
communication dated 29 November 2018.
48. Though, for reasons discussed earlier, we are inclined to
quash and set aside the impugned communication dated 16
June 2022, a writ of mandamus cannot issue as a corollary to
Page 25 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
such quashing. The quashing of the impugned communication
dated 16 June 2022 does not revive the communication dated
29 November 2018 or in any event does not confer upon the
communication dated 29 November 2018 some statutory
character of a refund order or some communication finally
determining that refund of Rs.20,73,06,062/- was due and
payable to the Petitioner without the necessity of any further
verification or adjudication.
49. In exercising discretionary jurisdiction under Article
226, we must remember that discretion is exercised on
equitable principles. If, upon quashing an impugned order,
another illegal order, ultra vires, or inequitable revives, then
the Court is not bound to exercise its discretion and permit
such illegal, ultra vires, or inequitable order to prevail or
revive. While we do not suggest that the impugned
communication dated 29 November 2018 is unlawful or ultra
vires, we are satisfied that the communication dated 29
November 2018 is neither a statutory order nor a final
determination on the refund issue. Therefore, upon quashing
of the impugned communication dated 16 June 2022, we
cannot immediately issue a writ of mandamus for refund by
relying entirely on the communication dated 29 November
2018.
50. The third issue is determined accordingly in the above
terms.
Page 26 of 28
::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
51. Therefore, the communication dated 16 June 2022
must be quashed and set aside for all the above reasons.
However, the communication dated 29 November 2018
cannot be treated or elevated to the status of a final and
conclusive determination of the Petitioner's entitlement to a
refund. No mandamus can be issued based entirely or solely
on the said communication.
52. Therefore, we dispose of this petition by passing the
following order: -
ORDER
(i) Communication dated 16 June 2022 is quashed and set
aside
(ii) Communication dated 29 November 2018 cannot be
treated or elevated to the status of a final and conclusive
determination of the Petitioner’s entitlement to a refund.
(iii) The first Respondent is now directed to pass a final order
determining the refund claim of the Petitioner, within eight
weeks from today, after giving the Petitioner the opportunity
of hearing and by passing a speaking order. All contentions on
merits are left open.
(iv) If the Petitioner is found to be entitled to the claim of
refund, interest at the appropriate rate must be granted to
the Petitioner from 10 October 2018 till the grant of refund,
and the time taken for not passing the final order would not
be attributable to the Petitioner.
Page 27 of 28
::: Uploaded on – 07/05/2025 ::: Downloaded on – 07/05/2025 22:21:48 :::
FINAL1.WP.3442.22(J)-2.DOCX
53. The Rule in this Petition is disposed of in the above
terms with no order regarding costs.
54. All concerned must act on an authenticated copy of this
order.
(Jitendra Jain, J) (M.S. Sonak, J) Page 28 of 28 ::: Uploaded on - 07/05/2025 ::: Downloaded on - 07/05/2025 22:21:48 :::
[ad_2]
Source link