VarahamurthiFlexirub Industries (P.) Ltd. vs State Tax Officer

The case at hand involves a petitioner challenging the actions of a State Tax Officer, who has confirmed a penalty against them. The petitioner is specifically contesting the authority’s directive to a bank (the 2nd respondent) to invoke a bank guarantee and forward the demand draft to the State Tax Officer (the 1st respondent).

The petitioner’s counsel argues that this directive violates provisions laid out in Section 107 of the Goods and Services Tax (GST) Act, which outline pre-deposit requirements. Additionally, they reference Section 78 of the same act, which grants the petitioner a three-month window to deposit the assessed amount. Based on these provisions, the counsel contends that the directive in the order (referred to as Ext.P3) to the bank is inherently illegal.

Furthermore, it’s argued that the petitioner intends to file an appeal within the next two to three weeks. This context adds urgency to the challenge against the directive to invoke the bank guarantee and forward the demand draft.

Overall, the petitioner’s stance is that the directive is not only contrary to the provisions of the GST Act but also impedes their ability to exercise their right to appeal the penalty within a reasonable timeframe.

The case involves a petitioner contesting an order from the State Tax Officer, which confirmed a penalty against them. The petitioner challenges the Tax Officer’s directive to a bank (the second respondent) to invoke a bank guarantee and send the demanded amount via demand draft to the Tax Officer (the first respondent).

The petitioner’s counsel argues that this directive violates provisions in the Goods and Service Tax Act, specifically pointing out Section 107 which mandates pre-deposit requirements. Additionally, they cite Section 78, which grants the petitioner three months to deposit the assessed amount. The counsel contends that the order to encash the bank guarantee and forward the amount is illegal, especially considering the petitioner’s intention to file an appeal within the statutory timeframe, which expires on May 15, 2021.

On the other side, the Government Pleader opposes the writ petition.

Considering the provisions of Sections 78 and 107 of the GST Act, the court decides to grant relief to the petitioner. They direct the second respondent not to comply with the first respondent’s directive to encash the bank guarantee and forward the amount. This directive is deemed illegal and is set aside. However, the petitioner is instructed to maintain the bank guarantee until the appeal is filed. Both parties are instructed to abide by the court’s decision.

Download PDF:

For Reference Visit:

Read Another Case Law:

GST Case Law: