Ab Traders vs. State Of Gujarat

Held

The Court held that the respondent's insistence on a bank guarantee for the balance amount, after the petitioner had paid the tax and penalty and furnished a bond as per the revised order dated November 12, 2021, was contrary to the provisions of the Goods and Services Tax Act, 2017, and the binding precedent of this Court in Western Enterprises vs. State of Gujarat. The Court clarified the distinction between a bond and a bank guarantee, emphasizing that a bond does not require collateral, unlike a bank guarantee. The Court found that the respondent No. 2 had a misconception of law and was acting "wiser than the Court." The Court directed the respondent No. 2 to release the goods and conveyance upon the petitioner depositing Rs. 18 Lakh towards tax and penalty and executing a bond for the balance amount of Rs. 52 Lakh. The petitioner was also directed to provide details of assets/properties for recovery of the bond amount if required.

Facts

The petitioner, AB Traders, a proprietorship registered in Karnataka, was transporting arecanut to New Delhi. The transporter commenced movement of goods before the e-way bill was generated due to network issues. On September 7, 2021, the truck was intercepted by Respondent No. 2. While the tax invoice and quantity matched, the goods were detained for the absence of an e-way bill. Subsequently, a detention and confiscation notice was issued, alleging non-availability of the e-way bill, suspension of the recipient's registration, and undervaluation of goods. The petitioner contested these allegations, pointing out the buyer's active registration and raising preliminary objections to the confiscation proceedings under Section 130 of the GST Act. The petitioner sought provisional release of goods and vehicle under Section 67(6) of the GST Act. Despite court directions for timely decision on provisional release, the respondent insisted on a bank guarantee for the balance amount, which the petitioner argued was contrary to statutory provisions and prior court decisions.

Key Issues

1. Whether the insistence by Respondent No. 2 on furnishing a bank guarantee for the balance amount, after the petitioner had paid the tax and penalty and furnished a bond as per the revised order dated November 12, 2021, is contrary to the provisions of the Goods and Services Tax Act, 2017, and the binding precedent of this Court in Western Enterprises vs. State of Gujarat? The petitioner argued that Section 67(6) of the GST Act, read with the decision in Western Enterprises, permits provisional release on furnishing a bond for the balance amount, not necessarily a bank guarantee, especially when the tax and penalty are paid. The petitioner contended that the demand for collateral security (bank guarantee) was unwarranted and arbitrary, as the statutory provision only required a bond. The petitioner also argued that the respondent's insistence on a bank guarantee was a misconception of law and contrary to the court's clear directions. The revenue or State did not record any specific arguments in the provided text.