The assessee-firm, engaged in EPC services, entered into a contract with Jharkhand Bijli Vitran Nigam Ltd. (JBVNL) for rural electrification works. JBVNL deducted 2% TDS from bills raised for supply of materials but did not deposit it with the Department. Instead, it retained the sums on the pretext of “Income-tax contingency”, linking release of the amount and issue of Form 16A with the outcome of its appeal against a demand raised u/s 201(1A). The assessee’s repeated requests for release of the withheld amount failed. On writ the Court held that JBVNL had no authority to retain the sums deducted, since under S. 195 read with s. 201 it was its statutory obligation to deposit the TDS with the Department and issue Form 16A. Pending appeal against the demand could not justify illegal retention. Such unjust withholding violated the principles of justice, equity, and good conscience, caused losses to the assessee, and resulted in unjust enrichment of JBVNL. The withheld sums were directed to be refunded with interest as per the Electricity Supply Code Regulations, 2015. The High Court also imposed costs of ₹5 lakhs on JBVNL, recoverable from its Managing Director, holding that the litigation was frivolous and actuated with oblique motives Court also held that the  statutory authorities are bound to act fairly even in commercial dealings; they cannot retain amounts due to contractors on the pretext of tax disputes. Costs can be imposed personally on officials where mala fide conduct is established. Court referred  Mahabir Auto Stores v. Indian Oil Corporation, (1990) 3 SCC 752; 1990 SCC OnLine SC 43 the Supreme Court held that the State or its instrumentalities are “State” under article 12 of the Constitution and its actions even in commercial transactions must be reasonable, fair and just, that the requirement of being just, fair and reasonable on the part of the State and its instrumentalities extends even in cases where no formal contract has been entered into.