Jharkhand HC Slams Tax Dept, Warns Commissioner Of Personal Liability Over ₹6.71 Crore VAT Refund Delay

The Jharkhand High Court has come down heavily on the State tax department for sitting over a VAT refund of Rs.6.71 crore for years, holding that excuses such as vacant posts and officers being on election duty are “neither legal nor satisfactory.”

A Division Bench of Chief Justice M. S. Sonak and Justice Rajesh Shankar directed the Commissioner, Commercial Taxes Department, to ensure that the refund is paid with 6% annual interest by May 5, 2026, warning that any delay beyond the deadline would result in the Commissioner personally paying the additional interest from salary.

Coming down strongly on the justification offered by the department, the court said, “The facts of this case are quite gross and therefore we are surprised by the attitude of the Revenue Department in delaying the refunds on a specious plea that the post is vacant or one of the officials has been deputed on election duty. On this ground, the functioning of the department cannot be stopped. In any event, these are not the reasons to delay the refunds, because delayed refunds invariably accrue interest, which is again paid only from the taxpayers' money."

The bench further underscored the accountability of officials, observing, “The officials, who are only the trustees, cannot delay such matters on the grounds now raised, simply because there is no mechanism to make them pay for the delay or to note such instances when assessing their performance in service. As a routine, such reasons or some equally frivolous reasons are cited to deny or delay refunds"

The case arose from a plea by Ram Kripal Singh Construction Pvt. Ltd., which had been granted a refund of Rs. 6,71,54,829 vide order dated January 4, 2017. The company applied for a refund on May 27, 2017, but no effective action was taken for a considerable period.

The refund process had begun, but things stalled when suo motu revision proceedings were initiated in March 2019. Those proceedings did not hold. On February 28, 2020, the Commercial Taxes Tribunal set aside the revisional order, effectively restoring the refund.

The department carried the matter to the High Court, but its challenge failed on January 15, 2024. Even then, the amount was not released. The company kept following up, sending representations through 2024 and into early 2025, without any result.

Before the court in the present proceedings, the department relied on the fact that it had approached the Supreme Court with a Special Leave Petition. That too did not help its case. The SLP was dismissed on August 1, 2025. The refund, however, still did not come through.

Terming the justification “frivolous,” the court directed that interest be paid at 6% per annum, calculated after 90 days from the first refund application.

It further ordered that if the amount is not refunded by May 5, 2026, “the interest for the further period shall have to be paid personally by the Commissioner, Commercial Taxes Department, Government of Jharkhand, Ranchi, and such amount should then be deducted from his/her salary."

The matter will be listed on May 7, 2026, for filing of a compliance affidavit.

For Petitioner: Advocate Sumeet Gadodia, Advocate Ranjeet Kushwaha, Advocate Sanya Kumari, Advocate Nidhi Lall

For Respondent: Senior Standing Counsel A.K. Yadav