The case of a tax refund dispute, the Petitioner sought the refund of Rs. 10,69,89,606/- for the year 2011-2012. The Respondents had adjusted this refund against a tax demand for the year 2010-2011, despite the Petitioner already settling the 2010-2011 dues under the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act, 2019 ("Settlement Scheme"). The court found the adjustment improper and ordered the refund to be processed along with interest.

1. Case Background

• Rule: Rule made returnable forthwith, case taken up for final hearing.
• Petition Basis: Filed under Article 226 seeking tax refund for 2011-2012 amounting to Rs. 10,69,89,606/- with interest.
• Petitioner Details: Engaged in vehicle trading, registered with the Respondent-Tax Authority.
• Assessment History:
  • 2010-2011: Original demand Rs. 17,76,93,422/-, reduced to Rs. 14,00,74,890/- on appeal.
  • 2011-2012: Original demand Rs. 9,67,02,366/-, resulting in a refund of Rs. 10,69,89,606/- after appeal.

2. Settlement Scheme

• Ordinance: Issued on 6th March 2019 for settling tax arrears as of 1st April 2019.
• Petitioner’s Actions:
  • 12th April 2019: Informed Respondents of considering the Settlement Scheme and not to adjust the refund for 2011-2012 against 2010-2011 dues.
  • 13th May 2019: Applied under the Scheme and paid Rs. 8,46,84,821/- for 2010-2011 dues.

3. Dispute

• Refund Adjustment:
  • Defect Notice: Issued on 14th May 2019 claiming a shortfall, based on adjusting the 2011-2012 refund.
  • Refund Adjustment Order: Issued on 23rd May 2019, adjusting Rs. 10,69,89,606/- refund against 2010-2011 dues.
• Petitioner’s Challenge: Filed a Writ Petition No. 8343 of 2019, remanded for reconsideration, resulting in rejection on 26th June 2023.

4. Petitioner’s Submissions

• Payment Details: Paid Rs. 19,16,74,501/- against Rs. 8,46,84,821/- due under the Settlement Scheme.
• RTI Findings: Refund for 2011-2012 approved on 10th and 14th May 2019.
• Legal Argument: Refund adjustment post-settlement application is illegal; adjustment against prior year’s demand is contrary to Rule 60 of the MVAT Rules.

5. Respondent’s Submissions

• Settlement Scheme Reliance: Cited Section 18, stating no refunds under the Scheme.
• Excess Payment Acknowledgement: Agreed there was an excess payment of Rs. 10,69,89,606/-.

6. Court’s Analysis and Conclusions

• Settlement Scheme Compliance: Petitioner paid the required amount on 13th May 2019, nullifying any 2010-2011 dues.
• Refund Adjustment Invalidity: Refund adjustment on 23rd May 2019 was illegal.
• Excess Collection: Acknowledged excess recovery of Rs. 10,69,89,606/-.
• RTI Findings Validity: Refund approvals on 10th and 14th May 2019 made later adjustments invalid.
• Legal Non-compliance: Defect notice dated 14th May 2019 was flawed, and reliance on Section 18 was misplaced.

7. Court’s Order

• Rule Absolute: Prayer clauses (a), (b), and (c) granted.
• Refund Directive: Ordered refund of Rs. 10,69,89,606/- with 6% interest from 1st June 2019 till payment.
• Bank Account Details: Petitioner to provide within two weeks; Respondents to process refund within four weeks of receiving details.

8. Petition Disposed

• Conclusion: The petition was disposed with directives for the refund and interest payment to the Petitioner.