5-WP-1232-2026.doc TCPL Packaging Ltd Vs. CPC, Bengaluru IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1232 OF 2026 TCPL Packaging Limited ...Petitioner V/s. Centralized Processing Centre, Bengaluru [CPC] & Ors. ...Respondents _______________________________________ Mr. K. Gopal, with Ms. Neha Paranjpe, for the Petitioner. Mr. P. A. Narayanan, for the Respondents. _______________________________________ CORAM : B. P. COLABAWALLA AND FARHAN P. DUBASH, JJ. DATE : 07th OCTOBER 2026 P. C.: 1. Rule. Respondents waive service. With the consent of the parties, Rule made returnable forthwith and heard finally. 2. The above Writ Petition is filed challenging the action of Respondent No. 1 in making unlawful adjustment of the refund of Rs.4,28,77,900/- for Assessment Year (“A.Y.”) 2024-25 and part of the refund for A.Y. 2021-22 of Rs.49,98,502/- against the demand of Rs.9,49,92,512/- for A.Y. 2017-18. 3. It was submitted that the Assessment Order passed for A.Y. 2017-18 under Section 143(3) of the Act has been challenged in an appeal before the First Appellate Authority. The Petitioner has completed its submissions in the appeal. However, the appeal order is still awaited. It was further submitted that, pending the appeal before the First Appellate Authority, the Petitioner, on ------------------------------------- Order dated 07th October 2026 AMOL PREMNATH JADHAV Digitally signed by AMOL PREMNATH JADHAV Date: 2026.10.12 12:19:26 +0530 5-WP-1232-2026.doc TCPL Packaging Ltd Vs. CPC, Bengaluru 13th February 2020, paid a sum of Rs.90,00,000/- against the outstanding demand of Rs.9,49,92,512/- for A.Y. 2017-18. The Petitioner also filed a stay application before Respondent No. 3 on 20th February 2020. Respondent No.3, vide order dated 26th February 2020, granted the stay of demand till 30th September 2020, subject to the further payment of Rs.50,00,000/-. This payment of Rs.50,00,000/- was made on 20th March 2020 (challans for the payment are at pages 93-94). Thereafter, on 18th August 2022, Respondent No.1 adjusted the refund for A.Y. 2021-22 amounting to Rs.1,38,99,900/- against the demand for A.Y. 2017-18 in the Intimation issued for A.Y. 2021-22 (refer page no. 98). Hence, the Department recovered an amount of Rs.2,78,99,900/- against the demand for A.Y. 2017-18 which comes 29.37% of the total demand for A.Y. 2017-18. 4. Subsequently, the Return filed for A.Y. 2024-25 was processed under Section 143(1) of the Act vide Intimation dated 16th April 2025 determining a refund of Rs.4,28,77,900/-. On the very same day, the Petitioner was issued an Intimation proposing the adjustment of the said refund against the demand for various Assessment Years including A.Y. 2017-18. On 30th April 2025, the Petitioner objected to the above adjustment and registered its disagreement with the outstanding demand raised for A.Y. 2017-18 on the e-filing portal. It was contended that 20% of the total demand of Rs.9,49,92,512/- comes to Rs.1,89,98,502/-. Therefore, the amount recovered in excess of Rs.1,89,98,502/- is unjustified and in contravention of Instruction No.1914, dated 21st March 1996 as modified by the Office Memorandum ------------------------------------- Order dated 07th October 2026 5-WP-1232-2026.doc TCPL Packaging Ltd Vs. CPC, Bengaluru [F.NO.404/72/93-ITCC] dated 29th February 2016, and further by Office Memorandum [F.NO.404/72/93-ITCC] dated 31st July 2017 issued by the Central Board of Direct Taxes (“CBDT”). 5. Further, on 24th April 2025, the Petitioner made an application for renewal of stay before Respondent No. 3, stating that a sum of Rs.2,78,99,900/- had already been recovered by the Department, which comes to 29.37% of the total demand for A.Y. 2017-18. As the Petitioner had disputed the said demand and filed the appeal before the First Appellate Authority, Respondent No. 3 was requested to stay the balance demand till the disposal of the appeal in light of Instruction No.1914, dated 21st March 1996 as modified by Office Memorandum [F.NO.404/72/93-ITCC] dated 29th February 2016, and further by Office Memorandum [F.NO.404/72/93-ITCC] dated 31st July 2017 issued by the CBDT. 6. However, inspite of filing the stay application, Respondent No. 1, on 28th May 2025, adjusted the refund of Rs. 4,28,77,900/- for A.Y. 2024-25 against the demand of Rs. 9,49,92,512/- raised for A.Y. 2017-18 (the demand as reflected in the CPC communication). Further, it is only after adjustment of the huge refund, the order dated 13th June 2025 was passed granting stay to the recovery of the demand for A.Y. 2017-18 till the disposal of the appeal by First Appellate Authority. 7. Thereafter, the Petitioner on several occasions, addressed letters before the Respondents and submitted that the action of Respondent No.1 in adjusting the ------------------------------------- Order dated 07th October 2026 5-WP-1232-2026.doc TCPL Packaging Ltd Vs. CPC, Bengaluru refunds and withholding the amount exceeding 20% of the demand for A.Y.2017-18 is unlawful and in contravention of the CBDT clarifications and modifications contained in Office Memorandum dated 29th February 2016 and 31st July 2017 in Instruction No.1914 dated 21st March 1996. In this clarification, it is stated that, if the appeal is filed before the First Appellate Authority, the Assessing Officer shall grant the stay till disposal of the appeal on payment of 20% of the outstanding demand. However, Respondent No.1 has unlawfully recovered more than 20% of the demand by adjusting the refunds for A.Y.s 2021-22 and 2024-25. 8. The Petitioner submitted that, as per Instruction No.1914, dated 21st March 1996 as modified by Office Memorandum [F.NO.404/72/93-ITCC] dated 29th February 2016, and further by Office Memorandum [F.NO.404/72/93-ITCC] dated 31st July 2017 issued by the CBDT, the department should recover only 20% of the disputed demand if the appeal is pending before the First Appellate Authority. Thus, the amount recovered over and above 20% of the disputed demand must be released to the Petitioner. 9. On the other hand, Mr. Narayanan, learned Counsel appearing for the Respondents does not dispute that the Respondents are duty-bound to follow the Office Memorandum dated 31st July 2017 and are required to confine the recovery/adjustment of 20% of the disputed demand which is the subject matter of appeal before the First Appellate Authority. He, however, submits that in the instant case the adjustment of more than 20% of the demand out of ------------------------------------- Order dated 07th October 2026 5-WP-1232-2026.doc TCPL Packaging Ltd Vs. CPC, Bengaluru the accrued refund is made by the CPC i.e. Respondent No.1. He further, submits that, there are no mala fides on the part of the Respondents. Many a time, there is a time lag or miscommunication between the Assessing Officer and the CPC which results in unintentional adjustment/recovery of more than 20% of the disputed demand which is the subject matter of the First Appeal. He further submits that the present proceedings are not adversarial in nature and prays that appropriate directions may be issued by this Court. 10. Having heard both the parties, we notice that, in this case, the assessment was completed for A.Y. 2017-18 vide Assessment Order dated 29th December 2019 passed under section 143(3) of the Act by assessing the Petitioner’s total income at Rs. 49,99,08,790/-. The Assessing Officer made a disallowance of Rs. 34,81,55,140/- under Sections 32 and 32AC of the Act. The same resulted into a demand of Rs. 9,49,92,512/-. The Petitioner challenged the said Assessment Order before the First Appellate Authority by filing an appeal on 24th January 2020 which is pending adjudication. Pending the appeal before the First Appellate Authority, Respondent No.1 adjusted the refund of Rs.4,28,77,900/- [for A.Y. 2024-25] and the refund of Rs.1,38,99,900/- [for A.Y. 2021-22], against the demand for A.Y. 2017-18. The total amount recovered by Respondent No.1 against the demand for A.Y. 2017-18 exceeds 20%. 11. We also noticed that on 24th April 2025, the Petitioner filed an application before Respondent No.3 seeking renewal of the stay to the recovery of the ------------------------------------- Order dated 07th October 2026 5-WP-1232-2026.doc TCPL Packaging Ltd Vs. CPC, Bengaluru demand as the amount in excess of 20% of the demand has already been recovered by the Department. Inspite of the same, Respondent No.1 adjusted the refund of Rs.4,28,77,900/- against the demand for A.Y. 2017-18. The Petitioner, vide letters dated 29th May 2025, 30th May 2025, 8th July 2025, 4th November 2025 and 17th December 2025 requested the Respondents to refund the amount adjusted in excess 20% of the disputed demand for A.Y 2017-18. Meanwhile, Respondent No.2, vide order dated 13th June 2025 also granted stay of demand till disposal of the appeal by the First Appellate Authority. However, despite making several requests, no measures were taken for releasing the amounts recovered in excess of 20% of the demand for A.Y. 2017-18. 12. We have gone through Instruction No.1914, dated 21st March 1996 as modified by Office Memorandum [F.NO.404/72/93-ITCC] dated 29th February 2016, and further by Office Memorandum [F.NO.404/72/93-ITCC] dated 31st July 2017 (Exh. U - page. 141) relied upon by the advocate for the Petitioner. The CBDT in the said Office Memorandum dated 31st July 2017 streamlined the process of grant of stay and standardized the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before the First Appellate authority. The said Office Memorandum is clear that the Assessing Officer can insist on recovery of 20% of the disputed demand as a pre-condition for stay of demand disputed in the appeal before First Appellate Authority. ------------------------------------- Order dated 07th October 2026 5-WP-1232-2026.doc TCPL Packaging Ltd Vs. CPC, Bengaluru 13. In the present case, the total demand raised for A.Y. 2017-18 as per the demand notice dated 29th December 2019 issued under Section 156 of the Act is Rs.9,49,92,512/-. The Petitioner has already made the payments of Rs.90,00,000/- and Rs.50,00,000/- on 13th February 2020 and 20th March 2020 respectively, against the said demand. Thereafter, on 18th August 2022, Respondent No.1 adjusted the refund of Rs.1,38,99,900/- for A.Y. 2021-22 against the demand for A.Y. 2017-18 vide Intimation issued on 18th August 2022 under section 143(1) of the Act. Further, on 28th May 2025, Respondent No.1 again adjusted the refund of Rs.4,28,77,900/- for A.Y. 2024-25 against the demand for A.Y. 2017-18. Thus, out of the total demand of Rs.9,49,92,512/-, the department has already recovered a sum of Rs.7,07,77,800/- which exceeds 20% of the demand. As per the Instructions and Office Memorandum issued by the CBDT as referred hereinabove, the Department can recover only 20% of the demand of Rs.9,49,92,512/- which comes to Rs.1,89,98,502/-. Thus, we direct the Respondents to refund a sum of Rs.5,17,79,298/- (Rs.7,07,77,800/- less Rs. 1,89,98,502/-) to the Petitioner within a reasonable period. Mr. Narayanan, on instructions from the Jurisdictional Assessing Officer of the Petitioner, submits that a period of four weeks from the date of the uploading of this order is reasonable period within which the Respondents would complete the refund as per this order. The said statement is duly accepted. 14. Rule is made absolute in the above terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs. ------------------------------------- Order dated 07th October 2026 5-WP-1232-2026.doc TCPL Packaging Ltd Vs. CPC, Bengaluru 15. Though we have disposed of the above Writ Petition, we place it on board for reporting compliance on 18th November 2026. 16. This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order. ( FARHAN P. DUBASH, J. ) ( B. P. COLABAWALLA, J. ) Jyoti Pawar ------------------------------------- Order dated 07th October 2026