India: Tax tribunal asks Income-Tax Department to refund Rs 2.7 crore to Skol Breweries

Mumbai-based brewing company, Skol Breweries, will be refunded Rs 2.68 crore by Income-Tax Department, The Economic Times (India) reported April 6.

In a rare case, the Income-Tax Appellate Tribunal (ITAT), the quasi-judicial body for settling tax disputes, came to the support of a taxpayer and directed the I-T department to refund Rs 2.68 crore it has recovered.

What irked the ITAT more in this case was the timing of the recovery. The amount was recovered from Skol while an interim stay order passed by ITAT was in operation. ITAT observed that by doing this the department was acting beyond its jurisdiction. The unusual order was passed by G E Veerabhadrappa, vice-president ITAT and Madhavi Devi, its judicial member.

The facts of the case are as follows: Skol Brewery had moved an emergency stay petition on March 27, 2007, requesting the Tribunal to intervene as the department had attached all its bank accounts after the I-T Commissioner rejected its stay petition.

The emergency petition was listed for hearing before the ITAT on March 27. After going through the documents, the Tribunal directed the department not to enforce recovery of the disputed tax dues until the matter is decided on March 30.

However, on March 30, Skol's counsel told ITAT that despite the stay order, the department has recovered the disputed dues from Skol Brewery. The Tribunal felt that revenue department had exceeded its jurisdiction, the ITAT said in its order. The ITAT then sought to hear the assessing officer who recovered the money.

During the next hearing on April 2, the assessing officer told ITAT that he was willing to refund the amount to Skol Breweries if so directed by ITAT. He also pleaded before the court that he did not want to enter into any contempt of its order. On the following day, the assessing officer, the I-T Commissioner and the department representative presented the cheque drawn in favour of Skol Brewery and pleaded before the Tribunal to drop the matter.

They also pleaded that recovery was done with a good intention of recovering the outstanding tax arrears. The counsel for the assessee also stated that he did not want to prolong the issue any further and offered his cooperation for an early disposal of the case.

Following this, the ITAT granted an absolute stay to Skol Brewery for 180 days or till the disposal of the appeal, whichever is earlier. The ITAT order is in the right spirit. However, I feel the department should have been asked to pay cost to the taxpayer, said T P Ostwal, a senior chartered accountant.

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