On writ the Court held that since the adjudication or determination of the entitlement to a refund under section 237 of the Income-tax Act, 1961 is an appealable order, it follows that there must be a written communication in which there is a final determination of the entitlement or disentitlement supported by reasoning so that the appellate authority can test it. Therefore, there must be an “order” under section 237. Such an order must be a conclusive and final determination of the entitlement or disentitlement to a refund of the excess amount paid. The emphasis need not be on the form or citation of the relevant legal provision. But the essential attributes of conclusiveness must be reflected. The parties must know that a formal determination of the refund claim was being considered and dealt with, so that all aspects could be pointed out and considered.

Article 265 of the Constitution of India also provides that no tax shall be levied or collected except by authority of law. The phrase “authority of law” would mean liability or entitlement under the Act. This would contemplate that before a person can be entitled to a refund, the Assessing Officer must satisfy that such an entitlement is in accordance with the provisions of the Act, and there must be a final determination of the correctness of the claim for refund. Based upon an inconclusive or tentative opinion of an Assessing Officer, no breach of article 265 can be alleged or established.

Section 237 refers to the phrase “satisfied”. The phrase satisfaction means fully and conclusively satisfied and not a prima facie satisfaction. Accordingly the Court directed the  Assessing Officer to pass a final order determining the refund claim of the assessee within eight weeks after giving it the opportunity of hearing and by passing a speaking order.(AY. 2018-19)