2022 (11) TMI 28 - HC - GST

Validity of proceedings under Section 129 of CGST Act - invocation of bank guarantee - It is the case of the petitioner that since the Appellate Tribunal has not been constituted, the appeal period has not even started to run and therefore the petitioner is entitled to a direction that pending the constitution of the Appellate Tribunal and without giving to the petitioner a right to file such appeal, the bank guarantee provided by the petitioner cannot be invoked - HELD THAT - As long as the provisions of Section 112 (8)(b) of the CGST/SGST Act requires the petitioner to deposit a sum equivalent to 20% of the tax amount in dispute as a condition for maintaining an appeal before the Tribunal, it must be held that even if the Appellate Tribunal is not constituted the petitioner must be directed to deposit a sum equivalent to 20% of the tax amount in dispute as a condition for stay of invocation of bank guarantee - This payment will however be subject to the condition that the same will be treated as sufficient compliance of the provisions contained in Section 112 (8)(b) of the CGST/SGST Act to maintain an appeal as and when the Appellate Tribunal is constituted. This Writ Petition is disposed of directing that on petitioner remitting an amount payable by the petitioner under Section 112(8)(b) of the CGST/SGST Act for maintaining an appeal before the Appellate Tribunal, any bank guarantee furnished by the petitioner in proceedings under Section 129 of the CGST/SGST Act will not be invoked.

Summary

Issues:
1. Invocation of bank guarantee under Section 129 of CGST/SGST Act.
2. Applicability of appeal period and bank guarantee invocation.
3. Requirement of deposit for maintaining an appeal before the Appellate Tribunal.

Analysis:
1. The petitioner challenged the proceedings under Section 129 of the CGST/SGST Act, where a bank guarantee was produced to release goods and conveyance. The 1st Appellate Authority confirmed the original proceedings, leading to the petitioner's apprehension of the bank guarantee being invoked before the constitution of the State Appellate Tribunal.

2. The petitioner relied on a previous judgment to argue that the bank guarantee should not be invoked until the appeal period is over, emphasizing that the appeal period commences only when the Appellate Tribunal is constituted. The Circular No.132/2/2020-GST was cited to support this proposition.

3. The Senior Government Pleader contended that for maintaining an appeal before the Appellate Tribunal under Section 112 of the CGST/SGST Act, the petitioner must deposit an amount equivalent to 20% of the tax in dispute. The court held that despite the non-constitution of the Appellate Tribunal, the petitioner must deposit 20% of the tax amount in dispute to stay the invocation of the bank guarantee.

4. The court directed the petitioner to remit the required amount under Section 112(8)(b) of the CGST/SGST Act within two weeks for maintaining an appeal before the Appellate Tribunal. This payment was deemed as sufficient compliance with the provision, ensuring that the bank guarantee would not be invoked. The petitioner was not required to deposit any further amount for maintaining the appeal once the Tribunal is constituted.

5. The judgment concluded by specifying that failure to renew the bank guarantee within the stipulated time would allow the officer to invoke it. However, the amount paid by the petitioner was considered as meeting the requirements of Section 112(8)(b) of the CGST/SGST Act, and no additional deposit would be necessary for maintaining the appeal in the future.