By TIOL News Service

CHANDIGARH, JULY 27, 2013: THE petitioner is before the High Court praying for the return of Rs. 10 Crores allegedly illegally recovered from the petitioners by the DRI forcibly and under coercion on 26 th April, 2012 inasmuch as there is no existing liability outstanding against the petitioners. It is also submitted that only one show cause notice has been issued with respect to the consignment which was lying at Inland Container Depot, New Delhi for which the maximum liability for about Rs. 50 lakhs could be fastened and in such a situation retention of Rs. 10 Crores was unjustified.

Reliance is placed on the observations of the Division Bench in Bhagwati International Vs. UOI 2005 (190) ELT 300 (P & H) and paras 11 to 13 in M/s Century Metal Recycling Pvt. Ltd. versus Union of India (2008-TIOL-711-HC-P&H -CX).

While opposing the prayer of the petitioners, the counsel for the Respondent DRI submitted that the petitioners were not entitled for the return of the aforesaid amount in view of the Constitution Bench Judgment in Suganmal versus State of M.P. and others, AIR 1965 SC 1740 as the writ petition itself was not competent. It was urged that the petitioners had voluntarily deposited the amount on 26th April, 2012 and, thus, there was no occasion for the petitioners to seek return of the same in the absence of any changed circumstances. It is further submitted that the aforesaid amount is required to be retained to safeguard the interest of the revenue. It was also pointed out that a show cause notice has been issued and further investigations and proceedings against the petitioners are going on in which the liability to the tune of Rs. 60 Crores could be fastened on the petitioners; that if interest and mandatory penalties are also added to the aforesaid amount, the total liability would be of about Rs. 100 to 120 Crores.

In rebuttal, the petitioners placed reliance upon U.P. Pollution Control Board and others versus Kanoria Industrial Limited and another, (2001) 2SCC 549 , ABL International Limited and another versus Export Credit Guarantee Corporation of India Limited and others, (2004) 3 SCC 553 and Godavari Sugar Mills Limited versus State of Maharashtra and others, (2011) 2 SCC 439 to controvert that in the aforesaid cases the apex Court had distinguished the Constitution Bench judgment in Suganmal's case by noticing that though normally writ of mandamus would not be entertained for the purpose of merely ordering of refund of money but the High Court had the powers to pass appropriate orders in exercise of jurisdiction under Article 226 of the Constitution of India in appropriate cases.

The petitioner also agreed for retaining of an amount of Rs. 2 Crores by the revenue till the finalization of the proceedings in pursuance to SCN already issued and also accepted that immovable property of plot valuing approximately Rs. 3 Crores belonging to the wife of petitioner which is free from all encumbrances as on date, would also not be alienated or any encumbrance would be created by the petitioners for a period of one year, during which, a direction may be issued to the respondents to conclude all proceedings in respect of ongoing investigations, if any, or show cause notice which has been issued.

The High Court accepted this submission and directed that the plot in respect of the petitioner has made a statement, no encumbrance shall be created or the aforesaid property shall not be alienated for a period of one year i.e. till 31st March, 2014 or till the finalization of the proceedings, whichever is earlier.

The High Court also observed that the objection of the respondent DRI regarding maintainability of writ petition does not merit acceptance in view of the judgments cited by the petitioner inasmuch as it is not in absolute terms that a writ petition for refund/return of the amount would be barred under Article 226 of the Constitution; in appropriate case, the writ court keeping in view the facts and circumstances can pass order as deemed fit.

As for the return of the amount sought by the petitioner, the High Court observed -

+ We find that as on date no crystalized liability has been shown to be existing against the petitioners. Further, only a show cause notice has been issued whereunder a liability to the extent of Rs. 50 lacs could be fastened. Insofar, as the matters which are under investigations, it has not been shown that any show cause notice in respect thereof has been issued by the respondent-department so far.

+ It is trite law that unless a demand, which is finalized and is existing which is liable to be discharged, the revenue cannot retain any amount unless there exists specific provision in the statute for the retention of the amount.

+ On a specific query put to the learned counsel for the revenue relating to any provision in the statute on the basis of which the revenue could provisionally retain the amount, learned counsel for the revenue candidly admitted that there is no such provision to retain the amount except to refer to Section 142 of the Customs Act, 1962.

+ On a query as to whether any order requiring the petitioners to refund the duty draw back as canvassed by the revenue had been passed, learned counsel for the revenue was unable to show that there existed any such order or authorization from any competent authority. It was only urged that it was a disputed question of fact as to whether the amount was deposited voluntarily or under coercion. Be that as it may, whatever be the situation, the revenue cannot retain any amount to which it is legally not entitled to as the same would be violative of Article 265 of the Constitution of India.

Accordingly, the High Court while directing the revenue to retain an amount of Rs. 2 Crores to safeguard its interest for being adjusted against any liability that might be created on the basis of investigations and/or show cause notice issued to the petitioners also directed that they return the balance amount of Rs. 8 Crores within a period of two weeks. It was further emphasized that in case the liability on the basis of the investigations and/or show cause notice issued to the petitioners is less than the amount retained, the respondent DRI should return the balance amount immediately on finalization of those proceedings.

The Petitioner was directed to co-operate and the Revenue was directed to make sincere efforts for completing the investigations and finalizing the proceedings on or before 31st March, 2014.

The petition was disposed of accordingly.

(See 2013-TIOL-580-HC-P&H-CUS)