Coronation Fireworks Factory Vs Joint Director (Madras High Court)
Madras High Court recently examined a significant case involving the Coronation Fireworks Factory and the Joint Director. The primary issue was whether a refund could be demanded for cash seized under Section 67 of the GST Act when a show cause notice (SCN) is issued for its appropriation against tax liability.
On October 8, 2020, an inspection led to the seizure of Rs. 1,82,25,000 from a partner of the petitioner, K. Jeyashankar. The seized amount was invested in a Fixed Deposit in the name of the President of India. Subsequently, the petitioner received a show cause notice dated December 28, 2023, demanding appropriation of the seized cash against their tax liability.
The petitioner challenged the show cause notice, citing a previous Tribunal order that indicated the seized cash should be refunded if not confiscated or used for tax liability. The Tribunal had ruled in favor of the petitioner, stating that the seizure was irrelevant to the case’s core issues.
The Madras High Court assessed whether the show cause notice issued after the Tribunal’s decision was valid. The court noted that the show cause notice did not propose confiscation of the cash but only sought to appropriate it towards the tax liability. The petitioner argued that such a notice was an attempt to undermine the Tribunal’s favorable order.
