Refund of deposited penalty amount follows setting aside of penalty order and failure to pass a fresh order on remand

A deposited penalty amount used to secure release of a vehicle cannot be retained once the penalty order is set aside in appeal and no fresh order is passed on remand. The department's inability to produce its records or complete the remand proceedings does not justify keeping the sum at the taxpayer's expense. In such circumstances, the amount must be refunded, with interest where law so provides, because the petitioner should not suffer for departmental lapse.

---

---

Issues: Whether the petitioner was entitled to refund of the penalty amount of Rs. 80,000 with interest after the penalty order had been set aside in appeal and no fresh penalty order had been passed on remand.

Analysis: The penalty had been deposited to secure release of the vehicle, and the appellate authority had already set aside the penalty order and remanded the matter for a fresh decision after hearing the petitioner. No copy of the appellate order or the original penalty order was supplied, and no fresh order was passed even after remand. In these circumstances, the department could not justify retaining the amount merely because its own records were unavailable. The petitioner could not be made to suffer for departmental negligence or inability to complete the remand proceedings.

Conclusion: The petitioner was entitled to refund of the amount of Rs. 80,000 with interest in accordance with law.

Final Conclusion: The writ petition succeeded, and the respondents were directed to release the deposited penalty amount to the petitioner with interest.

Ratio Decidendi: Where a penalty order is set aside and the authority fails to pass a fresh order on remand, the department cannot retain the deposited amount and must refund it, with interest where law so provides.

---