Karnataka HC Orders Refund After Entire Tax Demand Was Recovered Despite Interim Stay

Cashfree Payments India Private Limited Vs PCIT (Karnataka High Court)

The Karnataka High Court allowed the writ petition challenging an order relating to the petitioner’s request for waiver or dispensation of the 20% pre-deposit required for pursuing its appeal before the first appellate authority. The petitioner contended that the notice for personal hearing through video conferencing, issued on 8 March 2024 requiring appearance on 9 March 2024, did not provide sufficient opportunity to present its case. The petitioner also submitted that despite the High Court’s interim stay dated 17 April 2025 on recovery of the entire disputed demand, the respondents recovered the entire tax demand along with interest, entitling the petitioner to a refund.

The respondents submitted that, due to lack of coordination and miscommunication, the entire tax demand along with interest had been inadvertently appropriated. They jointly requested that the impugned order be set aside, the matter be remitted to the first respondent for fresh consideration, and the amount recovered in excess of the 20% pre-deposit be refunded within a stipulated time.

Taking note of the facts and the joint submissions, the High Court held that the petitioner should be given another opportunity to present its case before the first respondent. Accordingly, it set aside the impugned order dated 20 November 2024 and remitted the matter for fresh consideration in accordance with law. The Court directed the petitioner to appear before the first respondent on 17 November 2025, either physically or through video conferencing.

The Court further directed refund of ₹5,95,28,624 along with applicable interest to the petitioner within two weeks. It ordered that the remaining deposited amount would remain subject to the final outcome of the appeal before the first appellate authority. The first respondent was directed to reconsider the petitioner’s request for waiver or dispensation of the 20% pre-deposit while keeping in view the Karnataka High Court decisions in Flipkart India (P.) Ltd. and InstaKart Services Private Limited, and to complete the exercise within two months from 17 November 2025. Liberty was reserved to the petitioner to pursue appropriate legal remedies if dissatisfied with the interest granted.

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

In this petition, petitioner seeks for the following reliefs:-

“a) Issue a Writ of Certiorari, or such other Writ, Order or direction in the nature of a Writ of Certiorari, quashing and setting aside the Impugned Order passed by the Respondent No. 1 bearing DIN & Letter No. ITBA/COM/F/17/2024-25/1070492467(1) dated 20.11.2024 herein enclosed and marked as Annexure-A, as being manifestly illegal, invalid, null & void, unjust, unfair, arbitrary, irrational and violative of Article 14, 19 and 21 of the Constitution of India;

B) Issue a Writ of Mandamus, or such other Writ, Order or direction, as this Honourable Court may deem fit, restraining Respondent No. 4 from precipitating any coercive recovery proceedings in pursuance of Impugned Order passed by the Respondent No. 1 bearing DIN ITBA/COM/F/17/2024-25/1070492467(1) dated 20.11.2024 herein enclosed and marked as Annexure-A; and & Letter No.

C) Pass such other or further orders as this Honourable Court may deem fit and proper in the facts and circumstances of the case, and in the interests of justice and equity, including the costs of writ petition.”

2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.

3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner invited my attention to the impugned order at Annexure-A passed by the 1^st respondent in order to point out that notice of personal hearing through video conferencing was issued by him only on 08.03.2024 asking him to appear on 09.03.2024 was not sufficient for the petitioner to appear before him and make his submissions regarding his request to waive / dispense with deposit of 20% of the tax demand for the purpose of prosecuting the appeal filed by him, which is pending before the first Appellate Authority. It is also submitted that though this Court passed the interim order of stay in relation to the entire disputed demand amount on 17.04.2025 in the present petition, the respondents have proceeded to recover the entire amount together with interest is illegal and petitioner is entitled for refund of the entire amount. In this regard, an application I.A.2/2025 is filed by the petitioner.

4. Per contra, learned counsel for respondents 1 to 4 and learned counsel for 5^th respondent jointly submit that due to lack of co-ordination and miscommunication, the 5^th respondent inadvertently appropriated the entire tax demand amount along with interest from the petitioner and the present petition may be disposed of by setting aside the impugned order and remitting the matter back to the 1^st respondent for reconsideration afresh in accordance with law and by directing the 4^th respondent to refund the entire amount in excess of 20% back to the petitioner within a stipulated timeframe.

5. In view of the aforesaid facts and circumstances and the joint submissions made by both sides and in order to provide one more opportunity to the petitioner to put forth his contentions before the 1^st respondent, I deem it just and appropriate to set aside the impugned order and remitting the matter back to the concerned respondents for reconsideration afresh by issuing certain directions.

6. In the result, I pass the following:-

ORDER

(i) Petition is hereby allowed.

(ii) The impugned order at Annexure-A dated 20.11.2024 passed by the 1^st respondent is hereby set aside.

(iii) The matter is remitted back to the 1^st respondent for reconsideration afresh in accordance with law.

(iv) The petitioner shall appear before the 1^st respondent either physically or through video conferencing on 11.2025 at 2.30 p.m.

(v) A sum of Rs.5,95,28,624/- together with applicable interest is directed to be refunded back to the petitioner within a period of two weeks from the date of receipt of a copy of this order.

(vi) The deposit of remaining amount shall be subject to final outcome of the proceedings before the 1^st appellate authority.

(vii) The 1^st respondent shall reconsider the claim of the petitioner for waiver / dispensation of 20% pre-deposit bearing in mind the judgments of this Court in the cases of (i) Flipcart India (P.) Ltd., vs. Assistant Commissioner of Income Tax, Circle 3(1)(1), Bengaluru – (2017) 79 Com. 159 (KAR) and (ii) M/s.InstaKart Services Private Limited vs. The Prl.Commissioner of Income Tax(Central) & others – W.P.No.464/2022 Dated 23.07.2024 within a period of two months from 17.11.2025.

(viii) Liberty is reserved in favour of the petitioner to take recourse to such remedies as available in law including approaching this Court subsequently in the event the petitioner is not satisfied with the interest granted by respondent No.1.