IMPORTANT POINT
Trustees cannot retain interest earned on funds held in trust; they must account for all earnings to the beneficiary.

JUDGMENT :

JITENDRA JAIN, J.

1. Rule. By consent of the parties heard finally since the pleadings were completed.

2. Writ Petition (Stamp) No. 26523 of 2024 not on board, but by consent of the parties is taken up for hearing alongwith the present writ petition since the issue involved is common. However, in the present order, facts relating to Writ Petition No. 12299 of 2024 are narrated for sake of convenience.

3. By this petition under Article 226 of the Constitution of India, Petitioner is seeking for quashing of Order-in-Original (O-I-O) dated 5th July 2024 whereby Respondents have granted interest @ 6% per annum on the amount refunded to Petitioner by rejecting the claim of Petitioner to grant interest @ 18% per annum.

Brief undisputed and admitted facts are as under:

4. On 29th August 2011, an investigation was initiated by Respondent No. 4 against one Perfect Containers Pvt. Ltd. In the course of the investigation, Petitioner’s residence premises were searched and a sum of Rs.2,06,33,000/- was seized on the allegation that same constitutes unaccounted receipts arising out of sales made by Perfect Containers Pvt. Ltd. In the course of said investigation Rs.15,94,000/- was also seized from the residence of Petitioner’s son. The aggregate cash seized was Rs.2,22,27,008/-. The seized amount was deposited by Respondent No. 4 in fixed deposit with Punjab & Sind Bank.

5. On 19th May 2016, O-I-O was passed against Perfect Containers Pvt. Ltd., Petitioner and others whereby it was held that cash seized was towards sale proceeds of clandestinely removed goods and therefore the said cash was liable for confiscation. Penalty of Rs.21,25,199/- under Rule 26 of the Central Excise Rules was also imposed on Petitioner. Against the said O-I-O Petitioner and Respondents filed cross-appeals before Commissioner of Central Excise (Appeals).

6. On 31st March 2017, the first appellate authority set aside the order of confiscation of cash seized and penalty imposed on Petitioner. The said order was challenged by Respondents by filing an appeal with the Tribunal. The Tribunal, vide its order dated 18th October 2023, upheld the first appellate authority’s order of setting aside the confiscation of cash seized and penalty imposed on Petitioner. The said order of the Tribunal has attained finality. However, inspite of the order of both the appellate authorities being in favour of Petitioner and inspite of there being no stay on any of the appellate order and inspite of Petitioner’s request for refund vide various letters, Petitioner was not granted refund of the cash seized of Rs.2,06,33,000/-. So also Petitioner’s son was not given refund of Rs.15,94,000/-. Petitioner’s son has filed a separate writ petition being Writ Petition (Stamp) No. 26523 of 2024.

7. On 21st May 2018, Respondent No. 4 refused to grant the refund on the ground that the matter is pending before the Tribunal. The refusal was challenged by filing an appeal with the Commissioner GST & CX (Appeals) who, vide order dated 23rd January 2019, directed Respondents to process the claim of refund since there was no stay on the appellate order.

8. Meanwhile, on 2nd May 2019 Respondent No. 4 informed Respondent Nos. 2 and 3 that the seized currency was placed in fixed deposit with Punjab & Sind Bank. The said fact is also recorded in the impugned order dated 5th July 2024 and in the Affidavit in Reply of Respondent Nos. 1 to 3 affirmed by Manjula Arulselvan on 9th September 2023.

9. On 26th December 2023, 22nd February 2024 and 10th April 2024, Petitioner requested for refund of Rs.2,06,33,000/- along with interest @18% per annum.

10. Since Respondents were not granting refund of cash seized a Miscellaneous Application was filed before the Tribunal praying for refund of cash seized along with interest @18% per annum. Pending the Miscellaneous Application, impugned O-I-O dated 5th July 2024 came to be passed ordering return of seized cash of Rs.2,06,33,000/- along with interest @ 6% from the date of