M.A. Agro (Proprietor Mr. Ashfak Jafar Shekhani vs. Deputy Commissioner Of State Tax Rai Nod E 0102

Held

The Court held that the Contempt Petition would be closed based on the categorical submission by the Advocate General that the order dated December 9, 2025, would be complied with within two weeks by making the refund. The Court's decision was to allow the compliance to proceed, but with a crucial rider. The refund made to the Petitioner would be without prejudice to the rights and contentions of the Department to proceed in the matter, in accordance with law, based on the notice issued under Section 108 of the GST Act. This effectively means the contempt is purged by the intended refund, but the Department retains its right to pursue the separate proceedings initiated under Section 108. The Court did not decide on the merits of the alleged fraudulent transactions or the validity of the Section 108 notice, as these were not the subject of the contempt proceedings.

Facts

The Petitioner, M.A. Agro, filed a Contempt Petition alleging willful disobedience of a High Court order dated December 9, 2025. This order directed the Respondents (Deputy Commissioner of State Tax and others) to refund Rs. 7,27,83,010/- with interest to the Petitioner, following the dismissal of an appeal by the Department. The Respondents, through the Advocate General, submitted that a notice under Section 108 of the GST Act was issued by the Revisional Authority to reopen the matter due to detected fraudulent transactions connected to the Petitioner. This fact was not brought to the Court's attention when the December 9, 2025 order was passed. The Department proposed to comply with the refund order without prejudice to their rights in the Section 108 proceedings. The Petitioner's counsel had no objection.

Key Issues

1. Whether the Respondents have willfully disobeyed the order dated December 9, 2025, passed in Writ Petition No. 15764 of 2025, directing a refund of Rs. 7,27,83,010/- with interest to the Petitioner? (Question of law) The Petitioner argued that the Respondents' failure to issue the refund as directed constitutes willful disobedience, forming the basis of the contempt petition. The Respondents, represented by the Advocate General, contended that while they intend to comply with the refund order, certain fraudulent transactions linked to the Petitioner were discovered, leading to the issuance of a notice under Section 108 of the GST Act by the Revisional Authority. They argued that this subsequent development, which was not before the Court during the December 9, 2025 order, necessitates that compliance with the refund order be without prejudice to their ongoing proceedings. They relied on the principle that compliance can be made subject to pending investigations or revisional powers.