Bombay HC directs GST Authority to refund Rs.4.73 Cr covered by 8 encashed Bank guarantees with Interest to LM Wind Power Blades India [Read Judgment]

The Bombay High Court directed the respondent authority to refund an amount of Rs.4.73 Crores covered by 8 encashed bank guarantees with interest to the petitioner, LM Wind Power Blades India.

The petitioner, LM Wind Power Blades India Pvt. Ltd.  is a dealer registered under the CGST Act and Karnataka Goods and Services Tax Act, 2017. It is a private limited company engaged in the business of supplying components to the wind energy industry.

In the course of its business petitioner had supplied capital goods i.e. blade moulds from its Bangalore unit in Karnataka to its Halol unit in Gujarat vide tax invoice. Being an inter-state supply of goods, it was a taxable transaction. Value of the goods as per invoice was Rs.13,14,62,520 and IGST payable thereon at the rate of 18% was Rs.2,36,63,256.00.

The goods were being transported by four vehicles which were intercepted by respondent authority in the State of Maharashtra. Taking the view that the e-way bills were faulty and undervalued, orders of detention were passed by respondent authority under Section 129 of the CGST Act.

Simultaneously, demand notices were issued levying IGST of Rs.59,15,814 and an equivalent amount of penalty for each of the four vehicles, thus total IGST demand levied was Rs.2,36,63,256 and equivalent amount of penalty imposed.

The Petitioner admitted the discrepancies in the e-way bills were inadvertent clerical errors due to oversight.

The Petitioner stated that it would pay the IGST as determined but requested respondent authority not to impose penalty. In this connection petitioner furnished four bonds along with eight bank guarantees.Thus, the bank guarantees were for a total amount of Rs.4,73,26,512 covering the entire demand of IGST and penalty.

Apprehending that the bank guarantees would be encashed, petitioner sent email to respondent authority stating that the bank guarantees would be renewed and that petitioner was in the process of filing further appeals under Section 112 of the CGST Act. It therefore requested respondent authority not to encash the bank guarantees.

However, respondent authority encashed all the 8 bank guarantees covering an amount of Rs.4,73,26,512.

The division bench of Justice Abhay Ahuja and Justice Ujjal Bhuyan directed the Respondent authority to refund the amount of Rs.4,73,26,512 covered by the 8 encashed bank guarantees with applicable statutory interest thereon to the petitioner within a period of 4 weeks.

The court further directed the petitioner to furnish a fresh bank guarantee from the nationalized bank to the respondent authority for an amount of Rs.1,65,64,279 covering the balance amount of penalty imposed on the petitioner within a period of 4 weeks.