In a significant ruling, the Karnataka High Court directed authorities to refund an amount encashed from a petitioner, who is engaged in the manufacturing and trading of sports goods, due to the non-constitution of the Goods and Services Tax Appellate Tribunal (GSTAT).
The petitioner faced a show cause notice (SCN) from the department demanding tax along with interest and penalty. Despite filing a reply to the SCN, the demand was confirmed, prompting the petitioner to appeal.
However, the appeal was rejected, with the petitioner having to file a writ petition against the order.
The petitioner-assessee sought the Court to issue writ of mandamus and/or any other appropriate writ(s) directing the Respondent to withdraw recovery proceedings by issuing a demand draft equivalent to the Bank Guarantee of Rs. 11,21,840/- as on 1 February 2024.
The petitioner submitted he is not in a position to prefer an appeal against the impugned order dated 16.09.2023 since the appellate tribunal, GSTAT has not been constituted so far.
It was submitted that as and when the GSTAT is constituted, he would challenge the impugned order by filing a statutory appeal which may be permitted by the Karnataka High Court.
The counsel for the petitioner also submitted that the respondent may be directed to refund a sum of Rs.11,21,840/- back to the petitioner, who would furnish/issue a fresh bank guarantee in favour of the respondent within a period of one week from the date of refund.
The AGA, in reference to the circular dated 18.03.2020, in order to point out that the respondent has subsequently stated the limitation to prefer the appeal would arise only after constitution of the GSTAT and appointment of the president to the GSTAT. Hence, no prejudice would be caused to the petitioner if they are permitted to prefer a statutory appeal after the constitution of GSTAT.
He also submitted that subject to the condition that the petitioner would furnish a bank guarantee within a period of one week from the date of refund, the respondent shall refund the sum of Rs.11,21,840/- back to the petitioner.
The bench noted that, “It has been provided through the said Order that the appeal to tribunal can be made within three months (six months in case of appeals by the Government) from the date of communication of order or date on which the President or the State President, as the case may be, of the Appellate Tribunal enters office, whichever is later”, from the said circular.
It was thus held by the Single Bench of Justice S R Krishna Kumar that, “In view of the aforesaid facts and circumstances, I deem it just and appropriate to dispose of this petition by directing the respondent to refund the aforesaid amount of Rs.11,21,840/- encashed by the respondent on 01.02.2024 within a period of one month from today.”
It was further noted that, “immediately upon the respondent refunding the aforesaid amount
back to the petitioner, petitioner would furnish a fresh bank guarantee within a period of one week thereafter which would be valid for a period of one year.”
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