The petitioner sought refund of the entire pre-deposit made during VAT appellate proceedings, part of which was paid in cash and part by utilisation of ITC. Although the appellate proceedings culminated in favour of the petitioner, the department refunded only the cash component and withheld the portion paid through ITC.
The Court held that once the appeal is finally decided in favour of the assessee, the entire pre-deposit is liable to be refunded in cash in terms of the transitional provisions. Retention of the amount paid through ITC was held to be without authority of law. Directions were issued to refund the balance amount with applicable interest.