Bank guarantee required to de-freeze bank account provisionally attached can’t include interest and penalty payable: HC

Case Details: Mitansh Impex v. State of Gujarat - [2022] 144 taxmann.com 87 (Gujarat)

Judiciary and Counsel Details

• • N.V. Anjaria & Bhargav D. Karia, JJ.
  • Ms Vidita D Jayswal for the Petitioner.
  • Krutik Parikh for the Respondent.

Facts of the Case

The assessee was engaged in the trading of ferrous and non-ferrous metal since last two years. It was alleged to have availed ineligible input tax credit based on fake invoices issued by supplier whose registration was cancelled. The current account of assessee was attached to recover demanded amount. The assessee agreed to give bank guarantee to extent ITC was wrongly availed but Department urged that bank guarantee should be furnished in respect of total amount including interest and penalty.

The issue before the High Court was whether bank guarantee that was to be furnished should include interest and penalty along with tax amount. The assessee submitted that it had made payment of GST for the purchase transactions.

High Court Held

The Honorable High Court held that the bank guarantee amount should not include interest and penalty, when adjudication process is yet to be completed. Therefore, the assessee was required to submit bank guarantee only to extent of payable tax amount and the Court directed department to de-freeze current account pursuant to submission of bank guarantee.