Tax Refund Victory: GST Act Interpretation Limits Excessive Security Demands and Protects Taxpayer Rights
M/s. Raj Kamal Cargo Movers Versus The Assistant Commissioner, State Tax Department, The Chief Commissioner, State Tax Department.
M/s. Raj Kamal Cargo Movers Versus The Assistant Commissioner, State Tax Department, The Chief Commissioner, State Tax Department. - 2024 (81) G. S. T. L. ...
Issues Involved:The issues involved in the judgment are the demand for refund, withholding of refund, requirement of furnishing bank guarantee, and interpretation of Section 54(11) of the Rajasthan Goods & Services Tax Act, 2017.
Demand for Refund:The petitioner filed a writ petition seeking direction for the respondent No. 1 to issue the refund due to it. Orders creating a demand were passed by the Assistant Commissioner, which were later set aside, and the refund was ordered to be processed as per law.
Withholding of Refund:The respondent No. 1 referred the matter to withhold the refund under Section 54(11) of the Act, 2017. The respondent No. 2 concluded that there were no reasonable grounds for withholding the refund and directed the proper officer to process the refund application, subject to the petitioner furnishing solvent security.
Requirement of Furnishing Bank Guarantee:The respondent No. 1 ordered the petitioner to furnish a bank guarantee as a form of solvent security before allowing the refund, which the petitioner contested. The petitioner complied with the requirement of furnishing solvent security but objected to the demand for a bank guarantee, considering it beyond the scope of the Act.
Interpretation of Section 54(11) of the Act:The petitioner argued that the demand for a bank guarantee was not justified under Section 54(11) of the Act, as the original order required solvent security. The court found the demand for a bank guarantee to be contrary to the directions given by the appellate authority and ruled in favor of the petitioner.
Conclusion:The court allowed the writ petition, quashed the order seeking a bank guarantee, and directed the respondent No. 1 to comply with the directions of the appellate authority and Chief Commissioner within two weeks from the date of the order.