GST
TRT-2025-
Rajasthan High Court
Date:-20-12-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 20 December 2023
Parties: M/s. Raj Kamal Cargo Movers Vs The Assistant Commissioner, State Tax Department and The Chief Commissioner, State Tax Department
Facts –
- The Petitioner, M/s. Raj Kamal Cargo Movers, applied for a refund claim on 17/5/2022 through GST Common Portal. The Respondent withhold the refund, however the appellate authority sanctioned the refund by directed the petitoner to furnish solvent security.
- The petitioner submitted the requisite for complying with the directions of furnishing the solvent security and requested the respondent no.1 to refund the amount with up-to-date interest. However the respondent ordered that in the interest of State before allowing the refund, bank guarantee in the form of solvent security needs to be taken and required the petitioner to furnish the bank guarantee. The petitioner contested the said requirement of furnishing the bank guarantee, however, the refund was not made.
Issue –
- Whether the petitioner is required to furnish bank guarantee?
Order –
- The Divisional Bench of Hon’ble High Court observed that the order passed by the appellate authority while rejecting the prayer of the respondent on an application filed under Section 54 (11) of the Act, 2017 was very clear and specifically required the proper officer to process the application of refund as per the provisions of Act/Rules provided the petitioner furnishes the solvent security as per his satisfaction.
- Initially, respondent no.1 moved an application under Section 54 (11) of the Act, 2017 which came to be rejected by the authority and direction was given to the petitioner to provide solvent security. Once solvent security was produced by the petitioner, the respondent no.1 again, apparently not willing to refund the amount, has demanded bank guarantee from the petitioner.
- The solvent security is that of a person who is entitled to/recipient of the amount. Whereas, the ‘bank guarantee’ is a guarantee given by the bank on behalf of the applicant to cover the payment obligation to a third party. As such, it cannot be said that the demand of bank guarantee by respondent no.1 could be equated with providing solvent security in terms of the order passed under Section 54 (11) of the Act, 2017.
- In view of the above discussion, the action of respondent no.1 in seeking bank guarantee from the petitioner is ex facie contrary to the directions of respondent no.2 and, therefore, the same cannot be sustained.
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