Regarding refund of duty deposited during course of investigation

PJ/CASE LAW/2015-16/3001

Case-HINDUSTAN GRANITES Versus A.D.G., DRI, ZONAL UNIT, BANGALORE

Citation-2015 (326) E.L.T. 106 (Kar.)

Brief Facts-In this writ petition, the petitioner has sought for a direction to the respondents to refund the amount of Rupees Two Crores. According to the petitioner, the said amount of Rupees Two Crores was collected by the respondents under threat and without the authority of law.
It is not disputed by the learnedcounsel for the respondents that the respondents have received Rupees Two Crores from the petitioner in June, 2012. However he referred to Section 28(1)(b) of the Customs Act, 1962 and Para 7 of the statement of objections filed by the respondents and submitted that the petitioner had voluntarily deposited the amount of Rupees Two Crores.
However, even after lapse of two years, no demand for any duty is made against the petitioner and it is not the case of the respondents that, the petitioner, as on today, is due in any sum to the respondents, either by way of duty, interest or penalty.

Appelants Contention-In this writ petition, the petitioner has sought for a direction to the respondents to refund the amount of Rupees Two Crores. According to the petitioner, the said amount of Rupees Two Crores was collected by the respondents under threat and without the authority of law.

Respondents Contention-They referred to Section 28(1)(b) of the Customs Act, 1962 and Para 7 of the statement of objections filed by the respondents and submitted that the petitioner had voluntarily deposited the amount of Rupees Two Crores. Para 7 of the statement of objections reads as follows:
“7. It is submitted that, during the course of investigation, the petitioner who is well aware of his acts of evasion to tax and probable tax liability to be payable after investigation, to reduce future interest and penalty, on his own ascertainment of such duty, voluntarily deposited a sum of Rs. 2,00,00,000/- with the competent authority and informed the said fact of deposit in writing as contemplated under law vide Annexure-C. The contents of Annexure-C itself shows the deposit is made voluntarily to prove his bona fides and to avoid interest and penalty later.”
He also referred to the letter dated 6-6-2012 (Annexure-A) written by the petitioner which reads as follows :
“With reference to the ongoing investigation conducted against M/s. Hindustan Granites and M/s. Hindustan Marble and Granite, we have to state that to exhibit that we are a bona fide industrial unit doing business with an unblemished track record,have deposited a sum of Rs. 200 lakhs (Rupees Two Hundred lakhs only). This may please be treated as pre-deposit without prejudice to our rights to claim refund in the event the case would reach finality in our favour.”

Reasoning Of Judgement-As no demand is made for any amount against the petitioner, They find no justification for continued retention of the amount of Rupees Two Crores. It is unnecessary to examine the submission of the petitioner that Rupees Two Crores was collected under threat. Learned counsel for the respondents submits that the amount of Rupees Two Crores is lying in deposit with Respondent No. 1. As there is no legal justification for continued retention of the aforesaid amount of Rs. 2 crores, they direct Respondent No. 1 to refund the amount of Rupees Two Crores to the petitioner, expeditiously and in any event, within six weeks from today. At this stage, learned counsel on both sides submit that if the respondents issue a show cause notice to the petitioner within six weeks from today, there is no need for Respondent No. 1 to refund the amount of Rupees Two Crores and it shall be treated as deposit towards duty. Their submission is placed on record. Ordered accordingly. The writ petition stands disposed of in the above terms.

Decision-Petition disposed of

Comment-The gist of the case is that according the deposit of duty during the course of investigation even if the show cause notice is not issued is liable to be refunded, if no amount is legally due from petitioner either as duty or penalty. There is no justification in retention of amount by Revenue. But in case a show cause notice is issued within six weeks, then amount need not be refunded, and it shall be treated as deposit towards duty. And, accordingly the writ petition is disposed off.

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/3001

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