Bank guarantee is equivalent to tax payment for Section 129(1)

Skipper Limited Vs Union of India (Allahabad High Court)

The provision shows that upon seizure of goods and conveyances in transit, the Revenue shall issue a notice specifying the tax and penalty liable to be paid by the assessee and pass an order for payment and tax and penalty in the manner provided under Clause (a) or Clause (b) or Clause (c) of Section 129(1) of the UPGST Act, 2017. The provision envisages payment of the applicable tax and penalty or furnishing security equivalent to the amount payable. The goods and conveyances are liable to be released immediately upon payment of such amount or furnishing security of equivalent amount. Further, upon payment of amount or furnishing of security referred to Section 129(1) of the UPGST Act, 2017, the proceedings initiated by the notice under Section 129(3) of the UPGST Act, 2017 shall be deemed to be concluded in view of Section 129(5) of the UPGST Act, 2017.

The scheme of Section 129 of the UPGST Act, 2017 is the most reliable guide of the legislative intent. Section 129 of the UPGST Act, 2017 contemplates a comprehensive scheme with a summary procedure for release of goods and conveyances seized in transit. The  legislative intent is to secure revenue interests and equally to ensure expeditious release of the seized goods and conveyances. This procedure is distinct from the adjudicatory process of determination of tax liability. The scheme of Section 129 of the UPGST Act, 2017 thus achieves the purpose of keeping trade and commercial transactions unhindered by the adjudicatory process for determination of tax liability, while at the same time protecting revenue interests and allowing adjudicatory mechanism to run its course independently.

It is admitted by the State Revenue that the petitioner had furnished a security in the form of a bank guarantee, equivalent to the amount payable under clause (a) of section 129(1) of the UPGST Act, 2017, upon demand made by the Revenue to furnish such security of like amount.

It is beyond dispute that the petitioner had furnished the security in the form of a bank guarantee of the amount and in the manner required of him by the State Revenue Authorities, under Section 129(1)(a) read with Section 129(1)(c) of the UPGST Act, 2017, even prior to the order dated 04.12.2019. The security in the shape of bank guarantee remains deposited with the State Revenue. The seized vehicle and goods have been released on the strength of such security deposit. Hence, the proceedings taken out under section 129 of the UPGST Act, 2017 are liable to be concluded in view of section 129 (5) of the UPGST Act, 2017.

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