High Courts not custodian of revenue department, says SC; stays Bombay HC order

New Delhi: High courts are not the "custodian" of the revenue department, the Supreme Court has said while dealing with a petition challenging a Bombay High Court order that stayed a tribunal's direction for a refund of Rs 256.45 crore to a firm.

A bench of Justices Ujjal Bhuyan and Manmohan observed that prima facie, the high court could not have stayed the order after holding 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 could 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 bench noted that the high court had disposed of a writ petition as well as an appeal filed by the revenue department.

It also noted that the appeal was filed under section 35G of the Central Excise Act, 1944 against a January 2025 order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Mumbai that allowed the Service-Tax appeal of the firm.

The apex court said subsequently, the company filed an application for the release of the amount, which was allowed in May.

It noted that the high court had recorded in its June 12 order that both the petition and the appeal were "disposed of as not pressed with liberty to the respondent to prefer appeal before the Supreme Court, the high court has stayed the direction of CESTAT for refund for a period of eight weeks".

The bench issued a notice to the revenue department, seeking its response within six weeks on the firm's plea challenging the high court 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.