TaxTMI 
TaxTMI 
2024 (9) TMI 572
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....that although the seizure was wholly arbitrary and unwarranted in the facts which obtained, they were forced to make the payments aforenoted, since various other live shipping bills of export were also awaiting clearance. In both cases, Show Cause Notices came to be issued and ultimately ended in Orders-in-Original being passed as noted hereinabove. 3. Despite the closure of proceedings in favour of the writ petitioners, they were constrained to institute these writ petitions consequent to a failure on the part of the respondents to refund the amounts which had been deposited during the course of investigation. 4. Before us, the factum of the proceedings having ultimately resulted in closure was not disputed by the respondents. It is in the aforesaid context that Ms. Manish, learned counsel appearing for the writ petitioners, contends that the refusal to effect refund is wholly arbitrary and unjust. 5. Undisputedly, the amounts in question were deposited in the course of investigation and pending adjudication. The adjudicatory process has ultimately ended in favour of the assessee. In view of the above, we find no legal justification in the respondents continuing to retain the a....
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....posits made under protest and during the course of investigation as also those which may come to be created pursuant to statutory obligations laid in place cannot partake the character of tax or duty. 8. The fate of deposits made during the course of investigation, under protest and the liability of the respondents to refund was considered in some detail by our Court in Team HR Services Pvt. Ltd. V. Union of India 2020 SCC OnLine Del 2602 and where it was observed as follows: - "6. A perusal of the final rejection refund order dated 13th September, 2019 shows that the same also does not dispute that the sum of Rs. 2,38,00,000/- deposited by the petitioner on 27th October, 2006 was under protest and the said order records, (I) that on the petitioner preferring appeal to CESTAT, because the petitioner had already deposited more than 50% of the tax element, though under protest, the condition of pre-deposit was waived; (II) that CESTAT set aside the impugned order dated 3rd October, 2011 only on the question of limitation; (III) that the petitioner had filed the refund claim well within the prescribed time; (IV) that vide Circular dated 16th September, 2014, where the app....
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....s under which the petitioner deposited the said sum of Rs. 2,38,00,000/- during audit/investigation but the undisputed position remains that the deposit was under protest and against anticipated liability and which liability though fructified by the respondents was set aside by the CESTAT and which order has attained finality. It is not the case of the respondents that the said deposit was voluntary or by way of self-assessment and which has been accepted by the respondents and in which case the respondents could perhaps have argued that the said deposit was voluntary and not refundable, as was the case in Commissioner of Income Tax, Bhopal v. Shelly Products, (2003) 5 SCC 461. On the contrary, the assessment done by the respondents and the demand raised in pursuance thereto, of Rs. 4,66,39,061/- and where against Rs. 2,38,00,000/- was adjusted, has been set aside in entirety and as of today there is no assessment which had attained finality assessing the liability of the petitioner to tax of Rs. 2,38,00,000/-. The respondents as State can recover and/or retain as tax only such amounts which are assessed and found due as tax and which assessment has attained finality. The responden....
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....ow Cause Notice and, thus, absolves himself of any liability to pay the penalty. These provisions do not empower the Department to compel the taxpayer to pay any tax. 30. However, if the taxpayer, after such payment, turns around and claims that the payment had not been made voluntarily and the circumstances, as mentioned above, also point out towards the same, it must be accepted that the payments were not made voluntarily. The taxpayer, in such circumstances, will forfeit the immunity which he is entitled to, in terms of Section 73(6) of the Act from levy of any penalty. The authorities, in such cases, are not precluded from demanding any tax and also the penalty. xxxx xxxx xxxx 33. This Court also relied upon the judgment passed by the Gujarat High Courtin Bhumi Associate v. Union of India, 2021 SCC OnLine Guj 3016, decided on 16.02.2021 and held that the directions issued by the Gujarat High Court had not been followed. The Central Board of Indirect Taxes and Customs ('CBIC'), has also issued directions emphasizing that tax must be collected only after following the due process of law. The relevant extract of the instructions dated 25.05.2022, are set out below: "3. It ....