LM Wind Power Blades India Pvt. Ltd. Vs. State of Maharashtra (Bombay High Court)
Learned counsel for the petitioner submits that action of respondent No. 4 in encashing the bank guarantees without waiting for expiry of the appeal period is wholly illegal and should be declared as such by this court. He submits that respondent No.4 has appropriated an amount much more than the demand and penalty put together which is required to be refunded back to the petitioner with applicable interest. Petitioner had paid the IGST and thereafter 30% of the said amount at two stages; firstly 10% while filing the first appeals before the first appellate authority and secondly, 20% at the stage of filing further appeals before the appellate tribunal under Section 112 of the CGST Act and which unfortunately in the State of Maharashtra has not yet been constituted. In the light of the above, he prays for return of the amount covered by the eight bank guarantees and further submitted that petitioner would secure the interest of the revenue by providing fresh bank guarantees to cover the balance amount of penalty imposed.
Learned special counsel representing respondent Nos.1,3 and 4 submits that the bank guarantees had to be invoked under special and compelling circumstances as validity of those were expiring on 31st March, 2019. The above action was done bonafidely to protect the interest of the revenue.
Admittedly, there is IGST demand of Rs. 2,36,63,256.00 with equal amount of penalty imposed, together the total dues comes to Rs.4,73,26,512.00.
The amount covered by the eight bank guarantees is Rs.4,73,26,512.00. If both the figures are added i.e., the amount covered by the bank guarantees and the dues paid by the petitioner, the amount would be Rs.7,80,88,745.00 (Rs.4,73,26,512.00 + Rs.3,07,62,233.00) which amount is now with the respondents as against demand and penalty of Rs.4,73,26,512.00. From the above, it is evident that an amount of Rs.3,07,62,233.00 (Rs.7,80,88,745.00 – Rs.4,73,26,512.00) is lying in excess with the respondents. Even if the appeals filed by the petitioner under section 112 of the CGST Act are dismissed, petitioner would be required to pay a further amount of Rs.1,65,64,279.00 only whereas respondents are holding onto an amount of Rs.3,07,62,233.00 of the petitioner much in excess of the dues.
Section 107 of the CGST Act provides for appeals to appellate authority. Sub-section (1) says that any person who is aggrieved by any decision or order passed under the CGST Act may appeal to the prescribed authority within three months from the date on which the impugned decision or order is communicated. Sub-section (6)(b) provides that no such appeal shall be filed unless appellant has paid a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned decision or order. There is provision for filing further appeal to the appellate tribunal under Section 112. As per sub-section (1), any person who is aggrieved by an order passed against him under Section 107 or by the revisional authority under Section 108 may prefer appeal to the appellate tribunal against such order within three months from the date on which the order sought to be appealed against is communicated to the aggrieved person. As per sub-section 8(b), no appeal shall be filed under subsection (1) unless the appellant has paid a sum equal to 20% of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of Section 107. Subsection (9) clarifies that when the appellant pays the pre-deposit as per sub-section (8), recovery proceedings for the balance amount shall be deemed to be stayed till disposal of the appeal.
Section 115 provides for payment of interest on refund of amount paid for admission of appeal. It say that where an amount paid by the appellant under sub-section (6) of Section 107 or sub-section (8) of Section 112 is required to be refunded consequent to any order of the appellate authority or of the appellate tribunal, interest at the rate specified under Section 56 shall be payable in respect of such refund from the date of payment of the amount till the date of refund of such amount. Reverting to Section 56, we find that this section deals with interest on delayed refunds. Section 54, more particularly sub-section (5) thereof, deals with refund of tax. Section 56 says that if any tax is ordered to be refunded under sub-section (5) of Section 54, interest at such rate not exceeding six percent as may be specified shall be payable in respect of such refund.
That being the position and without entering into the controversy as to whether respondent No.4 received request of the petitioner for extension of the bank guarantees before encashment, we are of the view that having regard to the facts and circumstances of the case, the following directions will meet the ends of justice.
Accordingly, we direct as under :-
