Ab Traders vs. State Of Gujarat

Held

The Court held that the respondent's insistence on a bank guarantee for the provisional release of goods was contrary to the statutory provisions and previous High Court judgments. 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 what the Court has stated." The Court reiterated its earlier order directing the release of goods upon deposit of Rs. 18 Lakh towards tax and penalty and execution of a bond for the balance amount of Rs. 52 Lakh. The Court directed the respondent to release the goods and conveyance as the bond had already been furnished as required. The petitioner was also directed to provide details of assets/properties for the authority to recover the bond amount if necessary. The Court expressed its displeasure with the delay caused by the respondent's misunderstanding of the law.

Facts

The petitioner, AB Traders, a proprietorship registered in Karnataka, was transporting arecanut to Delhi. The transporter commenced movement of goods before receiving the e-way bill due to network issues and haste. On September 7, 2021, the truck was intercepted by Respondent No. 2. While the tax invoice and quantity matched, the goods were detained for lack of an e-way bill. A detention and confiscation notice was issued on September 10, 2021, alleging non-availability of the e-way bill, suspension of the recipient's registration, and undervaluation of goods. The petitioner contended the recipient's registration was active and raised preliminary objections to confiscation under Section 130 of the GST Act, requesting provisional release under Section 67(6). Despite court directions for timely decision on provisional release and adjudication, the respondent insisted on a bank guarantee for provisional release, 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 provisional release of goods, contrary to the petitioner's offer to furnish a bond as per statutory provisions and prior court decisions, is arbitrary and illegal? 2. Whether the demand for collateral security in the form of a bank guarantee is permissible under Section 67(6) of the GST Act when the petitioner has already paid the tax and penalty and is ready to furnish a bond for the remaining amount? Petitioner's Arguments: The petitioner argued that the respondent's insistence on a bank guarantee was contrary to Section 67(6) of the GST Act, which allows for furnishing of a bond. They relied on the High Court's decision in "Western Enterprises vs. State of Gujarat" which distinguished between a bond and a bank guarantee, stating that a bond does not require collateral. The petitioner contended that after paying the tax and penalty and offering to furnish a bond, demanding a bank guarantee was unjustified and arbitrary. Revenue's Arguments: The judgment does not explicitly record arguments made by the revenue or State. However, their actions indicate an insistence on a bank guarantee for provisional release.