Court Orders Return of Cheques Unlawfully Collected

The Court granted the Writ of Mandamus, directing the authorities to return the cheques collected without legal authority during inspection. Emphasizing that tax collection without assessment is unlawful, the Court ordered the unfreezing of the petitioner's bank account and return of the cheques within four weeks. Failure to deposit a specified amount within the given timeframe would authorize legal action by the authorities. No costs were awarded, and the miscellaneous petition was closed in compliance with the Court's directives.

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Issues:
1. Coercive collection of tax amount during inspection without assessment order.
2. Legality of cheques collected by authorities.
3. Validity of petitioner's claim of forced payment.
4. Applicability of legal principles on tax collection without assessment.
5. Freezing of petitioner's bank account.
6. Direction for return of cheques and unfreezing of account.

Analysis:
1. The Writ Petition was filed seeking a Writ of Mandamus to direct the respondents to return cheques collected during inspection without legal authority. Petitioner argued that the authorities coerced him into giving the cheques under threat of peril, emphasizing that tax collection without assessment is unlawful.

2. The respondent contended that the petitioner voluntarily provided the cheques upon being informed of the assessment value under TNVAT Act, 2006. The petitioner later stopped payment on the cheques, raising concerns about the voluntary nature of the transaction.

3. The Court considered the petitioner's claim that tax collection during inspection, without an assessment order, is impermissible. Citing precedents like Hotel Blue Nile Vs. State of Tamil Nadu, the Court reiterated that tax collection without assessment or a hearing opportunity is illegal.

4. Upholding the legal principles, the Court acknowledged the petitioner's rights while allowing the Department to act lawfully. The judgment directed the return of the cheques to the petitioner within four weeks, emphasizing the need to safeguard the petitioner's legal rights.

5. Subsequently, the petitioner informed the Court about the freezing of his bank account following the inspection. The Court intervened, stating that without proper assessment or demand, forcible tax collection is unjustified. It directed the authorities to unfreeze the account upon the petitioner depositing a specified amount within four weeks.

6. The judgment concluded by clarifying that failure to deposit the specified amount would empower the authorities to take legal action. No costs were awarded, and the connected miscellaneous petition was closed, ensuring compliance with the Court's directives.

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