Ramkaran Karwa Vs Union of India (Bombay High Court)
Conclusion: Commissioner of GST and Central Excise ( CX ) was directed to recover interest from the salaries or retirement benefits of officers responsible for the non-renewal of fixed deposits ( FDs ) arising from seized cash during an investigation.
Held: Assesee’s residence premises were searched and a sum of Rs.2,06,33,000/- was seized on the allegation that same constituted unaccounted receipts arising out of sales made by Perfect Containers Pvt. Ltd. In the course of said investigation Rs.15,94,000/-was also seized from the residence of assessee’s son. The aggregate cash seized was Rs.2,22,27,008/- which was deposited in fixed deposit with Punjab & Sind Bank. The cash seized was towards sale proceeds of clandestinely removed goods and therefore the said cash was liable for confiscation. Penalty of Rs.21,25,199/- under Rule 26 of the Central Excise Rules was also imposed on assessee. Assessee submitted that Respondents were not justified in not refunding the cash seized although there was no stay on the appellate order which was in favour of assessee. Assessee submitted that they were entitled to 18% per annum being the commercial rate of interest on the amount of refund of cash seized. Alternatively, he submitted that admittedly Respondents had earned interest at the rate of more than 6% whereas they had granted interest only at the rate of 6%, thereby unjustly enriching by the differential rate of interest and therefore assessee was entitled to the entire interest earned on the fixed deposit from the bank. CIT (A) set aside the order of confiscation of cash seized and penalty imposed on assessee. The said order was challenged by Respondents by filing an appeal with the Tribunal. Tribunal had set aside the confiscation of cash seized and penalty imposed on assessee. The said order of the Tribunal had attained finality. However, inspite of the order of both the appellate authorities being in favour of assessee and inspite of there being no stay on any of the appellate order and inspite of assessee’s request for refund vide various letters, assessee was not granted refund of the cash seized of Rs.2,06,33,000/-. Assessee also submitted that admittedly Respondents had earned interest at the rate of more than 6% whereas they had granted interest only at the rate of 6%, thereby unjustly enriching by the differential rate of interest and therefore assessee was entitled to the entire interest earned on the fixed deposit from the bank. It was held that while the department earned a higher rate of interest on the FDs, it only granted assessee 6%, which amounted to unjust enrichment. The court further observed that a trustee, in this case, the department, was required to account for all sums of money held in trust and should not benefit at the expense of the beneficiary. The High Court set a four-week deadline for the department to refund the amount, along with the interest earned on the FDs. Furthermore, if the refund was not made within the stipulated time, assessee would be entitled to an additional interest of 6% per annum from the expiration of the four-week period until the actual refund was made. The High Court of Bombay also directed the Commissioner of GST and CX to initiate an inquiry into the non-renewal of the FDs after 10 years and take appropriate action against the officers found negligent. This could include recovering the lost interest from the salary or retirement benefits of the responsible individuals.
