2014 (11) TMI 420 - HC - VAT and Sales Tax

Abkari offence - Recovery of dues under Kerala Revenue Recovery Act - The main contention urged by the petitioner is that there is no necessity to attach his property as he is willing to pay an amount of ₹ 1,75,000/- in lieu of confiscation - appellant claims that, but he has no obligation to pay any interest on the said amount - Held that - liability to pay the security amount arises when there is default on the part of the petitioner in not producing the vehicle before the competent authority. Apparently,the revisional order was passed by the Excise Commissioner on 5.11.2011. Admittedly, the vehicle was not produced after the order was passed in terms of Ext.P1. Therefore, the petitioner will have the liability to pay the security amount as well as interest on the amount due atleast from the date from which Ext.P1 was passed. Petitioner cannot contend that he is not liable to pay interest on the security amount after having failed to surrender the vehicle as per the directions issued in Ext.P1. In such circumstances, it was open for the Excise Department to demand security amount with interest which they have done and it is in the said circumstances that Exts.P2, P3 and P4 has been issued - Decided against assessee.

Summary

Issues:
Challenge to demand of interest and declaration of its legality.

Analysis:
The petitioner challenged the demand of interest from 29.7.2003 for a specific amount made in certain documents, seeking a declaration that it was illegal and arbitrary. The facts revealed that the petitioner's vehicle was seized in connection with an abkari offence, and confiscation proceedings were initiated resulting in an order for confiscation of the vehicle. The petitioner had previously sought interim custody of the vehicle by providing security equal to its market value, which was valued at Rs. 1,75,000. The petitioner used his title deed as security and obtained the release of the vehicle. Following the confiscation order, the petitioner did not surrender the vehicle, leading to demand notices under the Kerala Revenue Recovery Act and attachment of his property.

The main contention raised by the petitioner was that there was no need to attach his property as he was willing to pay the amount of Rs. 1,75,000 in lieu of confiscation, as allowed under the relevant rules. The petitioner argued that he was not given the option to pay the amount in lieu of confiscation as provided in the rules, citing a previous judgment. Additionally, the petitioner disputed the obligation to pay interest from 29.7.2003. The respondent, in their counter affidavit, detailed the steps taken after the confiscation order, including multiple notices to surrender the vehicle which went unanswered, leading to revenue recovery proceedings.

Regarding the claim under the relevant rules, the competent authority had passed an order directing confiscation of the vehicle, which had become final. Since there was no challenge to this order, the petitioner was obligated to return the vehicle taken after providing security. Due to the petitioner's failure to comply with the direction in the confiscation order, the department initiated steps to recover the security amount of Rs. 1,75,000 along with interest. The court held that the petitioner, having failed to surrender the vehicle as directed, was liable to pay both the security amount and interest from the date of the confiscation order. The judgment dismissed the challenge to the demand notices but limited the interest payment to start from the date of the confiscation order, directing the petitioner to pay the amount within a specified period to avoid further action on the notices.