Millenium Leisure Hospitality Services PVT. LTD. vs. Union Of INDIA And Ors

Held

The Court held that considering the short dispute, the petitioner's compliance with the statutory pre-deposit, and the fact that an appeal was filed, the demand for full recovery of tax and penalty before the appeal was heard was not appropriate. The Court reasoned that a balance needed to be struck between the revenue's interest and the petitioner's right to pursue their appeal. To facilitate the release of the vehicle and goods while safeguarding the revenue's interest, the Court directed that the petitioner should furnish an unconditional bank guarantee for 25% of the disputed tax and penalty, inclusive of the pre-deposit already made. This amount was calculated to be Rs. 2,60,000/-. The Court's ratio decidendi is that in cases where an appeal is filed with the statutory pre-deposit, the revenue's demand for the entire disputed amount before the appeal is decided can be substituted with a reasonable bank guarantee to secure the revenue, thereby allowing the petitioner to pursue their legal remedy without undue hardship. The Court ordered the immediate release of the vehicle and goods upon furnishing the bank guarantee, which is to remain valid until the appeal is disposed of.

Facts

The petitioner, Millenium Leisure Hospitality Services Pvt. Ltd., a transporter, had its vehicle carrying electronic goods intercepted at the Churaibari check post on June 27, 2021. The grounds for interception were an expired e-way bill for one consignment and the absence of an e-way bill for another. The petitioner contended that a vehicle breakdown necessitated arranging a replacement, causing a delay that led to the e-way bill expiry. A new e-way bill was subsequently generated. The assessing officer issued a show cause notice, and after the petitioner's representation, passed an order on July 2, 2021, confirming State and Central GST of Rs. 6,48,696/- each, along with equal penalties, totaling Rs. 12,97,000/-. The petitioner filed an appeal after depositing 10% of the disputed tax (Rs. 64,870/-) but the appellate authority's first hearing was scheduled for September 2021. Meanwhile, the assessing officer demanded full recovery of tax and penalty for the release of the vehicle and goods, prompting the petitioner to approach the High Court.

Key Issues

1. Whether the demand for full recovery of tax and penalty, prior to the disposal of the appeal by the appellate authority, is justified, considering the petitioner has made the statutory pre-deposit and filed an appeal? The petitioner argued that they had complied with the statutory requirement of pre-deposit (10% of the disputed tax) and had filed an appeal against the assessing officer's order. They contended that the demand for the full amount of tax and penalty before the appellate authority could hear the case was unreasonable and would cause financial hardship, especially as the vehicle and goods were being held. The petitioner sought the release of the vehicle and goods upon furnishing a bank guarantee. The respondents (revenue/department) did not record any specific arguments in the judgment regarding the justification of the demand for full recovery, but their actions implied a demand for full payment before releasing the goods. The judgment indicates the department was represented and heard.