Bank Guarantee Cannot Be Invoked During Statutory Appeal Period Under Section 129 of CGST Act

The HC stayed an order invoking a bank guarantee related to detained goods under Section 129 of CGST Act. The court found that since the petitioner had a statutory right to appeal within three months, the bank guarantee should not be invoked prematurely. The respondent had not yet invoked the guarantee and confirmed no intention to do so before the appeal period expired. The court directed the respondent to refrain from invoking the guarantee for four months from 20.12.2021, allowing the petitioner time to pursue appellate remedies, while requiring the petitioner to maintain the guarantee for four additional months.

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Issues:
Challenge to Ext.P3 order under Section 129 of the Central Goods and Service Tax Act, 2017 regarding bank guarantee invocation upon goods detention.

Analysis:
The petitioner contested the Ext.P3 order issued under Section 129 of the CGST Act, 2017, which invoked the bank guarantee while releasing detained goods. The petitioner sought relief, emphasizing the statutory provision allowing an appeal within three months, staying all proceedings if terms under Section 107 of the Act are followed. Despite the appeal period, the respondents moved to invoke the bank guarantee prematurely, claiming it was due. However, the Government Pleader clarified that the bank guarantee had not been invoked and the officer had no immediate intention to do so before the appeal period expired.

Considering the three-month appeal window, the court found it just to prevent bank guarantee invocation until the appeal deadline. The court noted that the order dated 20.12.2021, invoking the bank guarantee alongside the Section 129 CGST Act order, should be stayed. Consequently, the writ petition was resolved, directing the 1st respondent to refrain from invoking the bank guarantee for four months from 20.12.2021, allowing the petitioner to pursue appellate recourse. The petitioner was also instructed to maintain the bank guarantee for an additional four months from the judgment date.

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