TaxTMI 
TaxTMI 
2026 (5) TMI 1385
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.... of the appellant 3. Learned counsel for the appellant took us to the facts of the case which are as follows:- (i) On 16.09.2016 the officers of Directorate of Revenue Intelligence [DRI] visited the appellant's premises and initiated investigation and felt that the appellant was not entitled to exemption under India-Japan Comprehensive Economic Partnership Agreement for the goods that it had imported. According to the learned counsel, the officers of DRI compelled the appellant to deposit an amount of Rs. 12 crores during this visit itself, towards any future duty liability that may arise as a result of their investigation and the appellant did. (ii) After three months, on 16.12.2016, the DRI issued show cause notice (SCN I) demanding differential duty of Rs. 5,51,55,242/- along with interest in respect of 14 Bills of Entry cleared between 18.12.2014 and 17.10.2016. (iii) After another two months, on 21.02.2017 DRI issued a second SCN II proposing demand of differential duty with interest amounting to Rs. 36,83,481/- in respect one Bill of Entry dated 11.03.2015. (iv) After another 9 months, i.e. on 03.11.2017 DRI issued a third SCN(SCN-III) i....
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....ioner as well as the Commissioner (Appeals) have erred in bifurcating the amount of Rs. 12 crores deposited by the appellant during the investigation into two parts and treating one part (Rs. 73,88,268/-) as a pre-deposit and the other part (Rs. 11,26,11,732) as duty. (xiv) Any amount deposited during investigation before the issuance of the SCN or its adjudication cannot be treated as duty and it must be treated as a revenue deposit. The amount which the Assistant Commissioner treated as duty (Rs. 11,26,11,732/-) as duty was more than even the duty of Rs.9,85,10,239/- wrongly confirmed by the ADG, DRI. (xv) Once the Tribunal had passed the final order holding that no duty was payable there was no basis for the department to retain any part of the deposit or to treat it as duty. (xvi) The very basis for refunding a part of the amount as duty is flawed because there was no adjudicated demand to which the said amount could be attributed as duty. (xvii) The Commissioner (Appeals) placed reliance on the CBEC's Circular No. 984/08/2014-CX. dated 16.09.2014 which states that amounts deposited during the course of investigation in excess of the mandator....
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....ection 129EE of the Act. Insofar as the refund of the duty under section 27 is concerned, the Assistant Commissioner has treated it as duty on which no interest was payable, since the amount was refunded within three months from the date of application. The Assistant Commissioner was very prompt in refunding the duty amount and, therefore, no interest was payable as per the law. (v) The CBEC's Circular is binding on the department as held by the Supreme Court in Paper Products Ltd. versus CCE- 1999 (112) E.L.T. 765 (S.C.) (vi) The decisions relied upon by the learned counsel will not support the appellant's case. All those decisions were based on the decision of the Supreme Court in the case of Sandvik Asia Ltd. versus Commissioner of Income Tax - I, Pune and Ors.- MANU/SC/0752/2006 in which the assessee was allowed interest @ 9% on the ground of delay in refunding the amount. (vii) The decision of the Supreme Court in Sandvik Asia was considered by the Larger Bench of the Supreme Court in a batch of SLPs and Civil Appeals in Commissioner of Income Tax, Gujarat versus Gujarat Fluoro Chemicals- SLP (C) No. 11406 of 2008. Supreme Court clarified that ....
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....in a sum of Rs.40,84,906/- and interest @ 9% from 31.03.1986 to 27.03.1998 and in default, to pay the penal interest @ 15% per annum for the aforesaid period. 6. In our considered view, the aforesaid judgment has been misquoted and misinterpreted by the assessees and also by the Revenue. They are of the view that in Sandvik case (supra) this Court had directed the Revenue to pay interest on the statutory interest in case of delay in the payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period. 7. As we have already noticed, in Sandvik case (supra) this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to pay compensation for....
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....nue budgetary heads are as follows :- MAJOR / SUB-MAJOR HEADS MINOR HEADS 0020 Corporation Tax 101 Income Tax on Companies (1) 102 Surtax (2) 103 Surcharge (3) 104 Penalties (6) 105 Interest Recoveries 106 Tax on distributed profits of domestic companies 107 Tax on distributed income to unit holders (7) 500 Receipts Awaiting Transfer To Other Minor Heads (5) 800 Other Receipts (4) 0021 Taxes on Income Other than Corporation Tax 101 Income Tax on Union Emoluments including pensions (1) 102 Income Tax on other than Union Emoluments including pensions (2) 103 Surcharge (3) 104 Taxes on Income levied under State Laws (Sikkim) (6) 105 Penalties (8) 106 Interest r....
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....ability. Therefore, the amount was deposited under the head of duties of customs. 11. The next question to be answered is whether every rupee which has been deposited under the head of duty will automatically become duty or something more is required for the amount to be the duty. To examine this, we have look into the relevant legal provisions. As Justice GP Singh explained in Principles of Statutory Interpretation [G.P. Singh, Principles of Statutory Interpretation, 15th Edition page 615], there are three stages in the imposition of a tax, viz., (1) the declaration of liability in respect of persons or property; (2) assessment of tax that quantifies the sum which the person liable has to pay; and (3) methods of recovery if the person taxed does not voluntarily pay. [Ibid, citing Kalwa Dewdattam vs UOI, AIR 1964 SCC 880,p883; and Harshad Mehta v Custodian AIR1998SC 2291,p2298]. Thus, for something to be a tax it must be assessed and it can be recovered if the person taxed does not voluntarily pay when it is due. It must be remembered that the tax does not automatically become due once the taxable event takes place. Occurrence of the taxable event triggers the charge of tax. For....
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.... of the Act by the importer on a permission by the proper officer and (e) correction of clerical errors and mistakes by the officer under section 154 of the Act. 16. Each of these methods have their own limitations and an assessment can be modified only within the limits laid down in the respective sections. 17. In this case, when Rs. 12 crores was deposited by the appellant at the behest of the department, there was no assessment of any Bill of Entry nor any order modifying the assessment which required this amount to be paid as duty. Duty is defined in section 2 (15) of the Act as "duty of Customs leviable under this Act". No duty was levied or was leviable under the Act at that stage. There was also no adjudication order or appellate order or any other order which required the appellant to pay any additional amount as duty. According to the learned counsel, under pressure from the DRI officers investigating the matter, the appellant had paid this amount in the form of a DD. Although the covering letter of the appellant also indicated that it was to cover any future liability of duty, the undisputed fact is that at the relevant time there was no duty liability of t....
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....seek refund of balance lying in the electronic cash ledger after paying tax. This is an amount deposited in the exchequer under the CGST head of account but it was not CGST due and hence the assessee can simply claim refund. The relevant provisions of CGST Act are reproduced below: Section 49. Payment of tax, interest, penalty and other amounts.- (1) Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such conditions and restrictions as may be prescribed, shall be credited to the electronic cash ledger of such person to be maintained in such manner as may be prescribed. (2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with section 41, to be maintained in such manner as may be prescribed. **** (6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under this Act or ....
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....the application for refund of duty on being asked by the Assistant Commissioner because it was not duty of customs at all. The Supreme Court held in Tata Refractories and Another versus Sales Tax Officer and Others - (2003) Supreme Court cases 65 that the amount deposited would not became sales tax even though the application for refund was filed under Orissa Sales Tax Act. 24. The last question to be considered is whether the officers could ask the assessee to deposit some amount under the head of account of customs duties in anticipation of future liabilities that may arise consequent upon the investigation and the adjudication. The answer is NO. Wherever, the Parliament intended to provide for such anticipated collections in advance, it provided for it in the statute. Tax Deduction at Source, Advance Tax, etc. under the Income Tax Act are examples where the law provided for collection of tax before assessment in anticipation of future liabilities. Customs Act does not empower any customs officer to compel nor is there any obligation or any assessee to pay any amount in anticipation of any liability which may arise on investigation and adjudication. Duties have to be pai....