GST Demand Notice for Extra Neutral Alcohol Upheld, 25% Bank Guarantee Requirement Maintained with Procedural Flexibility

HC upheld GST demand notice for Extra Neutral Alcohol (ENA) supply. Court maintained interim order requiring 25% bank guarantee, rejecting appellant's challenge to jurisdiction. Emphasized appeal remedies available and declined to interfere with Single Judge's discretion. Extended bank guarantee submission time by three weeks, preserving procedural fairness without prejudging case merits.

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Issues:
Challenge to demand cum show cause notice for GST on supply of ENA; Jurisdiction of issuing show cause notice; Imposition of bank guarantee for interim stay order; Interpretation of CGST Act provisions; Applicability of GST on ENA for human consumption; Statutory deposit for appeal against tax liability; Validity of interim order directing bank guarantee; Availability of appeal remedy; Discretion exercised by Single Judge in interim order.

The judgment revolves around the challenge to a demand cum show cause notice for Goods and Services Tax (GST) on the supply of Extra Neutral Alcohol (ENA). The appellant contested the notice, questioning the jurisdiction of its issuance and the imposition of a bank guarantee for an interim stay order. The appellant argued that CGST could only be imposed based on the recommendation of the GST Council, and since there was no such recommendation for ENA supplied for human consumption, the GST imposition was without jurisdiction. The appellant also highlighted that the statutory deposit required for appealing a tax liability is only 10%, making the 25% bank guarantee condition unreasonable.

The respondent countered by asserting that the ENA supplied by the appellant, containing 95% alcohol, was not for human consumption but for industrial purposes, making it taxable under GST. The respondent emphasized that the appellant could raise all grounds, including jurisdictional issues, before the authority considering the show cause notice. The court noted that the order under consideration was interim, showing leniency by requiring a 25% bank guarantee based on the tax liability amount in the show cause notice. The court acknowledged the availability of the appeal remedy and declined to interfere with the Single Judge's discretion in imposing the bank guarantee condition.

The court further held that the appellant's argument regarding the 10% deposit for an appeal under the GST Act did not invalidate the interim order. The court refrained from delving into the merits of the case to avoid prejudgment, especially since the matter was pending before the Single Judge. Ultimately, the court disposed of the writ appeal, extending the time granted to furnish the bank guarantee by an additional three weeks to accommodate the appellant's appeal process.

In conclusion, the judgment upholds the interim order requiring a bank guarantee for the appellant challenging the GST imposition on ENA supply. It emphasizes the availability of appeal remedies and the discretion exercised by the Single Judge in granting the interim stay order. The court refrained from delving into the merits of the case, ensuring fairness and due process in the ongoing legal proceedings.

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