The Bombay High Court has directed the Commissioner of GST and Central Excise ( CX ) to recover interest from the salaries or retirement benefits of officers responsible for the non-renewal of fixed deposits ( FDs ) arising from seized cash during an investigation.
The seized cash, amounting to ₹2.22 crore, was deposited in fixed deposits by the department, but after a period of 10 years, the FDs were not renewed, leading to a loss of interest. The court noted the negligence of the officers involved and ordered an inquiry to hold them accountable.
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The case involved where the petitioner sought the return of the seized cash along with 18% interest per annum. The petitioner argued that the department had unjustly enriched itself by earning more than 6% interest on the seized cash while granting the petitioner only 6%.
The cash had been seized in 2011 during an investigation where the petitioner’s residence was searched, and the cash was held by the department for over a decade.
In its ruling, the bench of Justice K. R. Shriram and Justice Jitendra Jain acknowledged that the petitioner was not entitled to 18% interest per annum but did direct the department to refund ₹6,95,899 as the interest earned in excess of 6% on the fixed deposits.
The Bombay High Court noted that while the department earned a higher rate of interest on the FDs, it only granted the petitioner 6%, which amounted to unjust enrichment.
The court further observed that a trustee, in this case, the department, is required to account for all sums of money held in trust and should not benefit at the expense of the beneficiary.
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The High Court set a four-week deadline for the department to refund the amount, along with the interest earned on the FDs. Furthermore, if the refund is not made within the stipulated time, the petitioner would be entitled to an additional interest of 6% per annum from the expiration of the four-week period until the actual refund is made.
The High Court of Bombay also directed the Commissioner of GST and CX to initiate an inquiry into the non-renewal of the FDs after 10 years and take appropriate action against the officers found negligent.
This could include recovering the lost interest from the salary or retirement benefits of the responsible individuals.
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