JUDGMENT
Yad Ram Meena, J.
1. There shall be an order in terms of prayer (a) of the application.
2. On 30th March 1998 learned Counsel for the appellant, Sri Poddar, mentioned in the morning regarding the appeal filed by his client Nandalal Rander, even though tender number has not been allotted to the application and submitted that considering the urgency in the matter he had approached the Bench presided over by the Hon’ble the Chief Justice and the Hon’ble Chief Justice has assigned this appeal along with the stay application to this Bench for disposal. Therefore, without having any tender number he mentioned the matter before us with a prayer that the matter be heard in view of the urgency of the situation and also in view of the fact that his client has disclosed more than one crore of rupees under the Voluntary Disclosure Scheme, the amount which his client has paid to the Customs Department and unless the amount is refunded to the appellant, his client cannot pay the tax and avail of the benefits and amenities provided under the Voluntary Disclosure Scheme. He was allowed to argue on the stay application. Both counsel for the appellant and the respondents also agree that the appeal be heard along with the stay application finally. By consent of the parties, the appeal be treated on the day’s list and stands disposed of along with the stay application.
3. Heard learned Counsel for the parties on the stay application as well as on appeal.
4. In an auction held in respect of 157 bags of raw silk weighing 9648 Kgs. One Shambhu Pandey was declared the highest bidder. The appellant’s case is that Shambhu Pandey was the agent of the appellant and on his behalf he had participated in the auction. Against the total cost of the goods, Rs. 13,00,000/- was deposited in cash on 17th January 1997, Rs. 1,16,00,000/- in cash was deposited on 21 th January, 1997 and the balance sum of Rs. 7,42,000/- was deposited through cheques on 6th February, 1997. On 20th January 1997, a suit has been filed in this Court by the importer who imported the goods and whose goods were put to auction by the Customs authorities for non-payment of customs duties and demurrages and the learned Judge granted a stay of all further proceedings. On 3rd April, 1997 the appellant filed a writ a petition before this Court claiming that the said amount be refunded to the appellant and on 30th December, 1997 the appellant also disclosed Rs. 1,36,42,000/-under the Voluntary Disclosure of Income Scheme and insisted that the respondent-customs authorities be directed to refund the said amount to him so that he can pay the tax on the amount disclosed under the Voluntary Disclosure of Income Scheme.
5. Upon hearing the said writ petition, on 1st July 1997 an interim order has been passed by a learned Single Judge of this Court directing the respondents to decide the issue of refund and it is open to the respondents to consider the question as to whether refund should be made in the name of the appellant or in the names of the weavers on whose behalf the writ petitioner (appellant herein) claims to have deposited the money as the prospective purchasers of the raw silk on their behalf, and it was further directed that in case the petitioner made representation in this behalf, the same be disposed of within four weeks from the date of the said interim order.
6. In pursuance of the said direction a representation was made on behalf of the appellant-writ petitioner and the same has been disposed of by the respondents authorities on 22nd July 1997 refusing to refund the money amounting to Rs. 1,36,42,000/- on the ground that the cases in respect of the goods are pending in the Courts including this High Court and the sale in open auction has already been completed.
7. The said writ petition was finally disposed of vide an order dated 11.2.1998 by a single Judge of this Court holding that considering the facts and submissions of both the counsel of the parties it would be proper not to pass any order on the said application at this stage. However, liberty is granted to the appellant to apply before the appropriate forum for proper orders in accordance with law.
8. In pursuance of the decisions in the writ application, the appellant has submitted a representation before the Commissioner of Income-tax, Bangalore, Karnataka on 2nd March 1998 copies whereof have been sent to the Director, Income Tax (Investigation) Calcutta and Commissioner of Customs, Customs House, Calcutta. There is no reply forthcoming from the Director of Income Tax (Investigation) Calcutta and Commissioner of Customs, Calcutta but the appellant received a reply from the Commissioner of Income-tax, Bangalore in which it is stated that the issuance of certificate will be considered only after the entire tax is paid on the declared amount.
9. The case of the appellant is that when he has taken part in the auction bid and he was declared the highest bidder as also he paid the total amount of the bid money, either his money should be refunded or the goods should be delivered to him. Counsel for the Income-Tax Department and Customs authorities submitted that cases are pending in the Court and unless there is a decision by the Courts, moneys cannot be refunded, more so, it is not known to whom this money belonged as the appellant himself at one stage has claimed that the same belonged to the weavers.
10. In an application filed before the Commissioner of Customs dated 31.3.1997, in paragraph 4 thereof, the appellant himself has admitted that the appellant is the authorised agent of 210 weavers who had paid him the amounts to participate in the auction bid in order to procure silk yarn for and on their behalf and he is now under threat of prosecution by 210 weavers in view of the fact that he is unable to either refund the amount or deliver the silk yarn to them. We have also perused the receipts issued by the Customs Department which is at pages 30, 32 and 34 of the brief. In the receipt dated 20th January 1997 showing payment of a sum of Rs. 13,00,000/ – we found that the same has been issued in the name of one G. Nanjudappa although in the place for customer’s signature N. L. Rander has signed on behalf of other, that is, weavers. So is the case in respect of receipt dated 1st February, 1997 and 6th February 1997 for the balance amount.
11. Even when a query is put to Sri Poddar as to when the appellant himself has admitted that money belonged to the weavers how a stand can be taken that the money belonged to his client, he clarified that in fact no income-tax has been paid on the amount and taking advantage of the Voluntary Disclosure of Income Scheme his client disclosed this money under the scheme and thereafter has come out with the plain truth that the money belonged to him and not to the weavers. Counsel for the Customs and Income-tax Department that not only in the writ petition he has admitted that the amount belonged to the weavers but in fact in the statement of Shambhu Pandey recorded under Section 131 of the Income Tax Act Sambhu Pandey admitted having received the money from one Ashok Kumar who is stated to be the employee of one Venkataraman, one of the 210 weavers, though the statement of Venkataraman was also recorded wherin he denied having any connection with the money. In the circumstances it is difficult to say positively as to whom the amount belonged which was deposited against the purchases of raw silk, whether the same belonged to the appellant or to the weavers. In spite of directions of this Court as contained in the order dated July 1, 1997, the real owner of the money has not yet been identified. Therefore, if we direct the refund of money to the appellant without verifying the ownership of the amount lying with the Customs authorities, the same will not be safe. At the same time Customs authorities cannot withhold the amount as well as refuse to hand over the goods to the appellant.
12. For the purpose of refunding the amount, identity of the person to whom the amount belonged is necessary and that should be ascertained within reasonable time. The amount was deposited as back as in January/February, 1997. Now we are in March, 1998. If the importer is claiming the goods in the Suit Court and it is not possible to hand over the goods to the appellant or the person to whom the money belonged, how the Customs Department can withhold the amount and deny the refund of the money especially when there is no dispute regarding this money excepting the dispute as to the identity of the person to whom the money belonged. There is no dispute that the amount paid by Shambhu Pandey in the name of 210 weavers has nothing to do with the suit pending in this Court and therefore it is not fair on the part of the Customs Department to withhold the money on which they have no right in case they are not prepared to hand over the goods to the owner of the money which is lying with the Customs Department.
13. It is true that when the appellant has disclosed some amounts in the Voluntary Disclosure Scheme, he had to pay the tax on the amounts disclosed and that tax has to be paid within three months as per Sub-section 2 of Section 67 of the Finance Act relating to VDI Scheme 1997. He disclosed the amount in VDI Scheme on 30th December, 1997. Therefore, on or before 30th March, 1998 he has to deposit the tax; otherwise he may not have the benefit of the VDI Scheme. He has no other source to pay tax on that amount. In such circumstances, no doubt there will be some injustice to the appellant if the benefit of the Voluntary Disclosure Scheme is not extended to the appellant. But as discussed above, the appellant has changed the stand and initially his case was that he authorised Sambhu Pandey to take part in auction on behalf of the appellant for the 210 weavers who have paid the amount for purchase of raw silk from Customs House. Sambhu Pandey in his statement under Section 131 of the Income Tax Act states that he received the money from Ashok Kumar, who is an employee of Venkatraman and that the money belonged to Venkatraman. Venkatraman denied having any connection with these amounts. No enquiry has been made from the 210 weavers who according to the appellant were the contributors of the amount which has been paid to Customs Department.
14. Thus firstly without knowing that who is the owner of this amount, how any direction can be given to refund that money to the appellant when the case of the appellant is that money belonged to those 210 weavers. Without ascertaining the fact from them, how the entire amount can be treated is of the appellant on his changing the stand and claiming now the owner of that amount.
15. Even Counsel for the appellant also submits that the appellant has financed this amount to those 210 weavers. Therefore, by seeing the changed stand taken by the appellant it is not safe to refund the amount as prayed for. Therefore, it is necessary before directing for refund of the amount that identify of the person to whom this amount belong to should be known. But at the same time there should be a reasonable time within which the enquiry in this regard should be completed and if those 210 weavers do not claim the amount should be treated as of the appellant and if part of the amount some of the weavers claim, that part should be paid to them, if it is found that part of the amount belonged to those weavers.
16. A representation has already been made by the appellant to the Commissioner of Income-tax, Karnataka dated 2nd March, 1998 and copy thereof has been sent to the Director of Income-tax (Investigation) Calcutta, Commissioner of Customs, Calcutta and counsel for the Income-tax and Customs Department submit that they did not receive the copy of this representation dated 2nd March, 1998, wherein the appellant has claimed for the refund of the amount aggregating in all Rs. 1,36,42,000/- and is also prepared to pay tax of Rs. 30,22,600/-.
17. Even in the writ petition bearing No. 717 of 1997 which has been finally disposed of on 11th February, 1998, the learned Single Judge has left the matter open to the appellant who applied before the Appellate Forum. Now he has applied before the Income-tax Commissioner and sent copies of that representation to the Director of Income-tax (Investigation) Calcutta and Commissioner of Customs, Calcutta. But it is not sure whether the Director of Income Tax (Investigation) and Commissioner of Customs, Calcutta has received this representation. It is also pertinent to note that no appeal has been filed against the order of this Court dated 11.2.98, whereby the petition of the appellant has been disposed of finally and the impugned second interim order has been passed in the Writ Petition No. 635 of 1998, subsequently, filed by the appellant again claiming the refund of the amount which is lying with the Customs Department. When in the first petition liberty was given to the appellant to approach before the appropriate forum, the appellant by representation dated 2nd March, 1998 has approached the Commissioner of Income Tax, Karnataka and sent copies of this representation to the Director of Income-Tax (Investigation), Calcutta and Commissioner of Customs, Calcutta. In fact, the concerned officer is the Commissioner of Customs, Calcutta, with whom the money is lying. In addition to the copy of the representation dated 2nd March, 1998 which has been sent to the Commissioner of Customs, Calcutta, a separate representation is to be made to the Commissioner of Customs, Calcutta within a week and he is directed to dispose of that representation within four months from today giving the reasons in detail for his conclusion including considering the fact regarding identity of owners of the amount lying with the Customs Department as sale price of the raw silk.
18. Shri Podder, 1d. Counsel for appellant submits that if it is finally found that the above-noted money belonged to the appellant and he has disclosed it in the VDI Scheme, the appellant should have the benefit of that Scheme, even though appellant failed to pay the tax within the period specified under Sub-section (2) of Section 67 of the Finance Act relating to VDI Scheme. Though, that dispute is not before us and unless we know to whom this amount belonged, we have no comment at this stage as to whether in these circumstances, the appellant should have the benefit of VDI Scheme on the amount disclosed and that the tax could not be paid due to the litigation pending in this regard, but this issue will be considered at appropriate stage in accordance with law. As on today, unless we know the ownership of the amount, it cannot be said that whatever the amount which has been disclosed belonging to the appellant.
19. Considering the above submissions and discussions, the appellant is directed to make a representation to the Commissioner of Customs, Calcutta, with whom the amount of Rs. 1,36,42,000/- is lying, for refund of that amount within a week from date. The Commissioner of Customs, Calcutta, should make enquiry within four months and dispose of that representation within the time noted above, giving reasons in detail for his conclusion including the identity of owners of the amount in question. The Commissioner of Customs further directed to give reasonable opportunity to all the 210 weavers and any other person who claim the ownership of amount or part thereof. After enquiry refund the amount to its owner, but refund the amount to the extent on which there is no dispute. The appellant is also directed to co-operate the respondents to identify the real owner of the amount in question. Whether the appellant will be entitled to the benefit of VDI Scheme on the disclosed amount, that will be considered at appropriate stage. It is also made clear that the amount will be refunded to the appellant or any other person who is owner of amount only after deduction of the Income tax payable on the amount to be refunded and that should be paid to the Income-Tax Department.
20. Both the stay petition and the appeal, upon treating the same as on the day’s list by consent of the parties, stand disposed of as above.
21. There shall be no order as to costs.
22. Filing of paper book is dispensed with.
23. All undertakings given by the appellant including the undertaking in terms of prayer (a) of the application are discharged.
25. As the concerned respondents have not filed any affidavit-in-opposition to the connected petition which is taken up for hearing along with the hearing of the appeal therefore, no allegation contained in the stay petition will be deemed to have been admitted by the concerned respondents.
26. All parties to act on a xerox signed copy of the judgment on the usual undertakings.