Importers Must Provide Bank Guarantee and Bond to Secure Provisional Release of Detained Goods Under GST Rule 140(1)

The HC ruled on the requirements for releasing detained goods under GST regulations. The court mandated furnishing both a bank guarantee for tax and penalty and a bond for the goods' value as per Rule 140(1) of CGST Rules. The judgment modified the lower court's decision, providing a clear pathway for provisional release of seized goods by meeting specific statutory conditions.

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Issues:
1. Requirement of Bank Guarantee under Section 129 of the KGST Act and Rule 140 of the CGST Rules.
2. Furnishing of Bank Guarantee for tax and penalty versus bond for the value of goods.

Analysis:

1. The judgment pertains to an appeal against the decision in WP(C) No.25661 of 2018, where the appellant's goods were detained under Section 129 of the Kerala Goods and Services Tax Act, 2017, and Rule 140 of the Central Goods and Services Tax Rules, 2017. The first issue raised was the necessity of directing a Bank Guarantee to be furnished. The Court noted that the Section explicitly mentions a Bank Guarantee, and the appellant had agreed to furnish one. Consequently, the Court found no grounds to interfere with this requirement.

2. The second contention addressed was whether the Bank Guarantee should cover only the tax and penalty or if a bond for the value of goods could suffice. Rule 140(1) of the CGST Rules was cited, stating that seized goods may be released provisionally upon a bond for the value of goods in FORM GST INS-04 and a bank guarantee for the applicable tax, interest, and penalty. The Court interpreted this to mean that both a Bank Guarantee for tax and penalty and a bond for the value of goods are necessary. Thus, the judgment modified the Single Judge's decision to direct the release of goods upon furnishing a Bank Guarantee for tax and penalty and a bond for the value of goods as per Rule 140(1) of the CGST Rules.

3. In conclusion, the Court modified the original judgment and ordered the release of goods upon the appellant providing the required Bank Guarantee for tax and penalty, along with a bond for the value of goods as specified under Rule 140(1) of the CGST Rules. The appeal was disposed of with this directive.

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