2008 (7) TMI 88 - HC - Central Excise

Refund amount deposited during investigation i.e. during search and seizure - petitioner has submitted that there is no amount outstanding against the petitioner but still under duress and threat, the partners of the petitioner were forced to deposit revenue is directed to refund the impugned amount deposited by the petitioner during investigation department is not justified in retaining impugned amount in absence of demand raised

Summary

Issues: Petition for mandamus to return/refund money and cheques, dispute over voluntary deposit, legality of department retaining funds, safeguarding revenue interest, directives for refund, return of cheques, and property security.

In this case, the petitioner filed a writ petition seeking a writ of mandamus to compel the respondent to return/refund Rs. 1 crore and post-dated cheques of Rs. 1.5 crores, along with providing a copy of the Panchnama from the search and seizure. The petitioner claimed that there was no outstanding amount, and the funds were deposited under duress. The respondent argued that the deposits were voluntary and highlighted that the investigation was ongoing, suggesting potential liabilities exceeding the deposited amounts. The court noted that currently, no amount was due from the petitioner, and there was no justification for the department to retain the funds without a formal demand. The court ruled in favor of the petitioner, ordering the refund of Rs. 1 crore and the return of the cheques within one month, emphasizing that the department could recover any dues in the future.

Additionally, an affidavit was submitted stating the ownership of an industrial plot by the petitioner's son, free from encumbrances, to secure any future revenue demands. The court directed the respondent to refund the money and return the cheques, along with providing copies of relevant documents seized during the search. The industrial plot was to be maintained as security for any potential revenue claims, and the investigation by the Directorate of Revenue Intelligence was to be concluded within a year. The court clarified that its order did not prejudice the rights of either party, ensuring a fair resolution while safeguarding the revenue interest and addressing the legality of fund retention by the department.