The Supreme Court has strongly rebuked the Bombay High Court, asserting that High Courts are not "custodians of the Revenue Department." This censure comes after the Bombay High Court stayed an order from a tribunal that directed a refund of ₹256.45 crore to a private company, Tenormac Enterprises, despite acknowledging that it lacked jurisdiction in the matter. The Supreme Court deemed the High Court's order "strange" and has stayed the directive, emphasizing the importance of courts adhering strictly to the rule of law.
The dispute originated from orders passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in favor of Tenormac Enterprises. On January 24, 2025, CESTAT allowed the company's appeal, and on May 6, 2025, it further directed the Revenue Department to process a cash refund of ₹256.45 crore. Subsequently, the Commissioner of CGST & Central Excise, Belapur, approached the Bombay High Court through a writ petition and a statutory appeal under Section 35G of the Central Excise Act.
The Bombay High Court itself admitted that it lacked jurisdiction under Section 35G, as the issues involved the rate of tax and valuation, matters that should be appealed directly to the Supreme Court under Section 35L. Despite this acknowledgement, the High Court proceeded to stay the implementation of the CESTAT order, a move that has drawn sharp criticism from the Supreme Court.
During the Supreme Court hearing, a bench of Justices Ujjal Bhuyan and Manmohan questioned how the High Court could issue such an order after admitting its lack of jurisdiction. The Supreme Court bench stated that even the Union government must adhere to the legal remedies laid down by statute, emphasizing that the government cannot seek a stay "here and there" simply because it is the Union of India.
The Supreme Court also raised concerns regarding the government's delay in approaching the apex court after the CESTAT order on January 24, 2025. The bench questioned what prevented the government from filing an appeal before the Supreme Court, which has the appropriate jurisdiction to examine matters involving duty rates or valuation.
In its interim order, the Supreme Court has stayed the Bombay High Court's June 12, 2025 ruling. The Revenue Department is now free to pursue its appeal before the Supreme Court, which has the proper jurisdiction to examine the issues. The case is scheduled for further hearing on July 2, 2025.
The Bombay High Court's decision to grant interim protection to the government was influenced by concerns about the potential difficulty in recovering the substantial refund amount if it were disbursed and the Revenue Department later succeeded on appeal. The High Court also noted that Tenormac had ceased operations, raising further concerns about the recoverability of the funds. The Supreme Court, however, focused on the jurisdictional impropriety of the High Court's intervention.
This ruling underscores the Supreme Court's stance on the jurisdictional limits of High Courts, particularly in revenue matters. While High Courts possess broad powers, including original, writ, appellate, and supervisory jurisdiction, they are not considered custodians of revenue. The Supreme Court has emphasized that adherence to the rule of law is paramount, and statutory remedies must be followed meticulously, even by the government. The Supreme Court's intervention aims to ensure that legal processes are respected and that jurisdictional boundaries are maintained within the Indian judicial system.
