Voluntary tax payment and lawful recovery: cheque taken during inspection could not be retained without an enforceable liability.

A cheque taken during inspection was treated as non-retainable where it was not shown to have been given voluntarily or against an established, legally enforceable liability. Rule 23 of the Tamil Nadu Value Added Tax Rules, 2007 governs payment of tax and related dues, and recovery must proceed only in accordance with law. On the stated facts, the revenue authority could not retain the cheque on the basis of an unfinalised demand, though it remained free to pursue lawful recovery under the TNVAT Act if tax was later found due.

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Issues: Whether the cheque taken from the petitioner during inspection was obtained coercively and, if so, whether the respondent was bound to return it.

Analysis: The dispute turned on whether the cheque represented a voluntary payment towards tax or had been extracted during inspection without a legally enforceable demand. Rule 23 of the Tamil Nadu Value Added Tax Rules, 2007 governs the modes of payment of tax and other amounts due under the Act. On the correspondence between the parties, the petitioner had consistently asserted that the cheque was forcibly obtained and that the liability itself had not attained finality through legal process. In the absence of an established liability, the demand for retaining the cheque could not be sustained.

Conclusion: The cheque was not shown to have been given voluntarily, and the respondent was directed to return it. The respondent was left free to proceed under the TNVAT Act if any amount was lawfully found due.

Ratio Decidendi: A cheque collected without a legally enforceable liability and without voluntary consent cannot be retained by the revenue authority, and tax recovery must proceed only in accordance with law.

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