KIRAN OVERSEAS Vs. ASSISTANT COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) PURSUANT to proceedings initiated under Section 124 of the Customs Act, 1962, the Collector of Customs, Cochin called upon the petitioner, an exporter, to make payment of Rs. 7,32,477.44 as duty, besides imposing a penalty of Rs. 3 lakhs. The petitioner challenged the order in appeal before the Customs, Central Excise and Gold (Control) Appellate Tribunal, South Regional Bench at Madras. The Tribunal allowed the appeal by order dated 20 -6 -1988, a copy of which is Ext. P 1. The demand for payment of duty, as also the imposition of penalty were both set aside.

(2.) PENDING appeal, and in compliance with an interim order of the Tribunal on an application for stay made before it, the petitioner made deposit of an amount of Rs. 3.5. lakhs towards the demand, and furnished security by way of bank guarantee for Rs. 8 lakhs. But virtue of the order Ext. PI of the Tribunal, the petitioner became entitled to refund of the amount of Rs. 3.5 lakhs, as also for revocation of the bank guarantee. The Tribunal had specifically stated in its order that the bank guarantee will stand discharged. The petitioner applied to the respondents for refund of the amount deposited and for revocation of the bank guarantee consequent on the order Ext. PI. Copies of the applications made by the petitioner are Exts. P2 and P3, dated 29 -6 -1988 and 8 -7 -1988 respectively. The request has not been complied with despite the lapse of over three months. The petitioner has therefore filed this original petition for direction to the respondents to return the amount of Rs. 3.5 lakhs as also to discharge the bank guarantee for Rs. 8 lakhs.

(3.) THE deposit of Rs. 3.5 lakhs was made by the petitioner pursuant to the interim order of the Tribunal on an application for stay made before it. The bank guarantee was also furnished in compliance with that order. The amount was paid towards the levy made by the Collector in his order on adjudication. When the appeal was allowed by the Tribunal, and the demand and imposition of penalty set aside, the petitioner became entitled forthwith to restitution of the amount, and for discharge of the bank guarantee. The right of the respondents to retain the amount paid being referable only to the order of adjudication of the Collector, when once the order is set aside, the very foundation of the demand goes and the amount becomes eo instant refundable to the petitioner. Section 72 of the Indian Contract Act, 1872 recognises that a person to whom money has been paid or anything delivered by mistake or under coercion must repay or return it. Article 265 of the Constitution directs that no tax shall be levied or collected except by authority of law. This entails a further or concomitant duty on the State to refund what has been collected contrary to constitutional or statutory provision'. (vide Aluminium Industries Ltd. v. Agricultural Income Tax and Rural Sales Tax Officer, 1961 KLJ 1336 Rajagiri Rubber and Produce Co. Ltd. v. Additional Sales Tax Officer : [1983]143ITR742(Ker) and Salonah Tea Co. Ltd. v. Superintendent of Taxes : [1988]173ITR42(SC) . As stated by the Supreme Court in Commissioner of Sales Tax v. Auraiya Chamber of Commerce (1981) 167 ITR 458, in such cases, the right of refund is embedded in the very fact of payment. The duty to make refund or restitution is not postponed by any contemplated appeal or other proceeding in challenge of the order Ext. P1. In the absence of any order of stay from the Supreme Court, the respondents are bound to comply with the order Ext. P1 and grant refund.