New Delhi: The Supreme Court has remarked that high courts are not the "custodian" of the revenue department, while hearing a petition challenging a Bombay High Court order that stayed a tribunal's directive to refund ₹256.45 crore to a private firm.
A bench comprising Justices Ujjal Bhuyan and Manmohan noted that, on the face of it, the high court should not have stayed the refund order after determining that the appeal filed by the Commissioner of CGST and Central Excise, Belapur Commissionerate, was not maintainable.
"A high court is not the custodian of the revenue," the apex court, which stayed the high court's June 12 order, observed.
"Prima facie, the high court SC Says High Courts Not Custodians of Revenue Dept, Stays Bombay HC Refund Order
not have passed the order of stay after holding the appeal to be not maintainable and after recording that the writ petition and the appeal are disposed of as not pressed," the bench said in its order passed on June 20.
The top court passed the order while hearing a plea filed by the firm, challenging the high court order.
The Supreme Court observed that the Bombay High Court had disposed of both a writ petition and an appeal filed by the revenue department. It noted that the appeal, filed under Section 35G of the Central Excise Act, 1944, challenged a January 2025 order from the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had ruled in favour of the firm’s service tax claim.
Following this, the company submitted an application for the release of the refund, which was approved in May. However, the high court, in an order dated June 12, recorded that both the petition and the appeal were "disposed of as not pressed," granting the revenue department liberty to approach the Supreme Court. Despite that, it stayed the CESTAT’s refund order for a period of eight weeks.
The apex court has now issued a notice to the revenue department, directing it to respond within six weeks to the firm’s petition challenging the high court’s stay order.
"In the meanwhile, impugned order of the high court dated June 12, 2025 shall remain stayed," the bench said.
"This order shall, however, not preclude the respondent from filing appeal before this court under section 35L of the Central Excise Act, 1944, if not already filed, which shall be decided on its own merits and/or limitation," the bench said and posted the matter for further hearing on July 2.
(inputs from PTI)