Karnataka High Court
M/S Hindustan Granite vs Commissioner Of Central Excise on 6 June, 2012
Author: B.S.Patil
Bench: B.S.Patil
WP 19377/2011
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 6TH DAY OF JUNE, 2012
BEFORE
THE HON'BLE MR.JUSTICE B.S.PATIL
W.P.No.19377/2011 (Excise)
BETWEEN:
M/s.Hindustan Granite,
No.20, Subramanyapura,
Uttarahalli Village,
Bangalore-61,
rep.by its Shri M.G.Ananda Reddy. ... PETITIONER
(By Sri V.R.Balasubramani, Adv. For Sri Vinayak Assts.)
AND:
Commissioner of Central Excise,
Bangalore I Commissionerate,
P.B.5400, C.R.Building,
Queens Road,
Bangalore. ... RESPONDENT
(By Smt.C.Geetha, Adv.for N.R.Bhaskar, SCGC)
This writ petition is filed under Articles 226 & 227 of the
Constitution of India, praying to direct the respondent to
refund payback forthwith the amount of Rs.60,00,000/-
collected during the period of investigation and etc.
This petition coming on for Hearing, this day, the Court
made the following:
WP 19377/2011
2
ORDER
1. In this writ petition, petitioner has sought for a direction to the respondent-Commissioner of Central Excise, Bangalore, to refund a sum of Rs.60 lakhs collected during the period of investigation.
2. The case of the petitioner is that it is a proprietary firm carrying on business of processing and exporting polished granite and marble slabs. On 13.01.2011, the officers attached to the Headquarters Preventive, Bangalore-I Commissionerate, visited the factory premises and the registered office of the petitioner and recovered several records maintained by the petitioner. After drawing the mahazar, petitioner was informed that they had reasons to believe that the petitioner had adopted incorrect valuation for determination of the value of finished goods cleared in the Domestic Tariff Area. It is further contended by the petitioner that after a lapse of a week, the officers directed the petitioner to make payment of certain sum towards the duty liability to be determined by them as, according to the officers, the records seized disclosed incriminating material. WP 19377/2011 3 Petitioner contends that yielding to the pressure of the departmental officers, a sum of Rs.60 lakhs was deposited as per challans dated 25.01.2011 and 11.02.2011, under protest.
3. The contention of the petitioner is that it is not in any manner liable to pay any duty and although it has not indulged in any irregularity, due to the pressure exerted on them, they were forced to deposit huge sum of Rs.60 lakhs and the said amount is lying with the respondent right from January/February 2011.
4. Learned Counsel for the petitioner submits that the respondent is not entitled to recover any amount towards probable dues at the time of raid and search conducted. He further contends that the respondent is under a legal obligation to refund this amount. In support of his contention that the amount is illegally recovered by force and the respondent is therefore liable to refund the same, he has placed on the judgment of the Apex Court in the case of DABUR INDIA LTD. VS STATE OF UTTAR PRADESH -
1990(49) E.L.T. 3(SC). Reliance is also placed on the judgment of the Division Bench of the Calcutta High Court in WP 19377/2011 4 the case of M/S. NARESH KUMAR & CO. VS UNION OF INDIA & ORS. - 2010-TIOL-497-HC-KOL-ST . Reliance is placed on the judgment of the High Court of Punjab and Haryana rendered in the case of RAGHU EXPORTS VS UNION OF INDIA - 2008(229) E.L.T. 655 (P & H).
5. Learned Counsel appearing for the respondent having taken me through the statement of objections filed, submits that petitioner deposited the amount voluntarily as against the liability on account of short payment of the dues, pending completion of the investigation. It is the further contention of the respondent that if at all there was any force exerted on the petitioner to deposit the amount, nothing prevented the petitioner to approach the higher authority, viz., the Commissioner of Central Excise, Bangalore, alleging that such force was exerted against them and that the amount was deposited under pressure. It is urged by the Counsel for the respondent that the remedy for the petitioner is to apply for refund before the competent authority, but not to rush to this Court by filing this writ petition.
6. On careful consideration of the respective contentions and the materials on record and in the light of the ratio laid WP 19377/2011 5 down in the judgments relied on by the petitioner, it emerges that the amount of Rs.60 lakhs is collected by the respondent even before an order is passed determining the actual liability of the petitioner. Though it is contended by the petitioner that it was forced to pay this amount, there is nothing to show that the petitioner had complained before the higher officers regarding threat or force exerted on it to pay the amount. It is true that the amount is paid by the petitioner after raid was conducted and seizure was undertaken by drawing up a mahazar. But, that by itself, in the facts of the present case, in the absence of any allegation made by the petitioner against the authorities who had allegedly exerted pressure on them by filing necessary representation/complaint before the higher officer, cannot be taken to conclude that the deposit was made under pressure. In exercise of the writ jurisdiction such a conclusion cannot be taken to arrived at with recording evidence and without examining the relevant materials. This Court desists from undertaking such an exercise as it is in the area of disputed questions which cannot be ascertained based on the pleadings available in the writ petition as of now. WP 19377/2011 6
7. However, the fact remains that the respondent has collected this amount even before the order is passed by the competent authority determining the liability of the petitioner. The contention of the petitioner is that it is not at all liable to pay this amount. Counsel for the petitioner is right and justified in drawing the attention of the Court to the observations made by the Division Bench of the Calcutta High Court in some what similar circumstances, wherein it is held that when the payment has been received not according to law and the liability to make payment arises only when the tax liability is ascertained and not before that, the department would not be justified in collecting the amount and would be liable to return the same. However, in the facts of the said case, the authorities had not even issued any show cause notice for determination of the tax liability. Taking note of the said fact, the Division Bench of the Calcutta High Court issued a direction to the authorities to refund the amount to the petitioner therein with a further direction to the petitioner to invest the said amount in short term fixed deposit in any nationalized bank with a condition that he shall not encash the same. It was made clear that in the meanwhile it would be open for the Revenue to take steps to pass necessary WP 19377/2011 7 orders to ascertain the tax liability and to take steps for recovery of the same in accordance with law.
8. The other judgments relied upon by the petitioner make it clear that the department is not entitled to retain the amount collected illegally.
9. In the instant case, Counsel for the respondent has made available the show cause notice dated 19.05.2012 issued by the respondent herein notifying the petitioner of his liability to pay the dues. In paragraph 6 of the show cause notice, the Commissioner has stated that the total duty to be paid by the petitioner in respect of several works and transactions would come to Rs.8,70,79,825/- as per the details enclosed in Annexure-B to the show cause notice. It is further notified in para 7 that the assessee having deposited an amount of Rs.60 lakhs in January/February 2011, steps would be taken to pass necessary orders once written reply was submitted. Petitioner is given 30 days time to submit the reply. It is thus clear that as contended by the respondent in the statement of objections and as per the show cause notice issued on 19.05.2012, after conducting necessary WP 19377/2011 8 investigation, the authorities have issued the show cause notice and the petitioner is given time to submit his reply. If the petitioner submits his reply, the authorities will pass necessary orders recording a finding about the liability of the petitioner.
10. In such circumstances, in my considered view, having regard to the huge amount that is sought to be levied as duty payable against the assessee as per the show cause notice and in view of the fact that the entire proceedings can be expedited and completed by issuing a direction to the Commissioner to receive the reply from the petitioner and pass final orders within a period to be fixed by this Court, it is not appropriate to direct refund of the amount at this stage. But ends of justice would be met if the amount deposited by the petitioner is treated as a deposit in the hands of the respondent entitled to earn interest at 9% for the period from the date of deposit till the petitioner becomes entitled to claim refund after final order is passed. If the order goes in favour of the petitioner, the amount deposited shall be refunded along with interest at 9%.
WP 19377/20119
11. Petitioner is directed to file his reply within two weeks from today. The Commissioner is directed to consider the matter and pass orders after conducting necessary enquiry in accordance with law within a further period of four weeks from the date of receipt of the reply. As already ordered, petitioner will be entitled for refund along with interest at 9% in case he succeeds in the proceedings.
12. Writ petition stands disposed of in terms stated above.
Sd/-
JUDGE