The demand for a bank guarantee by the authority was found unjustified as it contradicted the requirement of providing solvent security under Section 54(11) of the Rajasthan Goods & Services Tax Act, 2017.

JUDGMENT :

This writ petition has been filed by the petitioner seeking direction to the respondent No.1 to issue the refund due to it forthwith.

2. It is inter alia indicated that the orders dated 30/3/2021 and 28/5/2021 were passed by the Assistant Commissioner, State Taxes, Ward - I, Circle - Anti Evasion, Division III, Jaipur creating demand of Rs.26,70,276/- and Rs.34,88,364/-, respectively.

3. Feeling aggrieved, the petitioner filed appeal which came to be decided by order dated 28/5/2021, whereby, the orders dated 30/3/2021 & 28/5/2021 were set aside and the amount of demand recovered from the petitioner of Rs.34,88,354/- was ordered to be refunded as per law.

4. The petitioner applied online on 17/5/2022 through GST Common Portal for refund of the amount. The respondent no.1 referred the matter to his higher authority for withholding the amount of refund under Section 54(11) of the Rajasthan Goods & Services Tax Act, 2017 ('the Act, 2017').

5. The respondent no.2 after hearing the parties, passed the order dated 7/12/2022 (Annex.3) and came to the conclusion that their exists no reasonable and strong ground for withholding the refund and directed the proper officer to process the application of refund as per the provisions of Act/Rules provided the petitioner furnishes solvent security as per his satisfaction.

6. The petitioner submitted the requisite for complying with the directions of furnishing the solvent security and requested the respondent no.1 to refund the amount with up-to-date interest. However, the respondent no.1 by order impugned dated 21/2/2023 ordered that in the interest of State before allowing the refund, bank guarantee in the form of solvent security needs to be taken and required the petitioner to furnish the bank guarantee. The petitioner contested the said requirement of furnishing the bank guarantee, however, the refund was not made.

7. Feeling aggrieved, the present petition has been filed.

8. Learned counsel for the petitioner made submissions that though the order passed by the respondent no.2 requiring the petitioner to furnish solvent security is beyond the scope of Section 54 (11) of the Act, 2017 still the petitioner complied with the requirement of furnishing the solvent security, however, the respondent no.1 going beyond the directions given by respondent no.2 has demanded bank guarantee from the petitioner, which is not justified and, therefore, the order dated 21/2/2023 (Annex.5) be set aside and the respondent no.1 be directed to refund the amount along with interest in accordance with law.

9. It was further submitted that action of the respondent no.1 in demanding the bank guarantee only reflects high handedness of the said authority inasmuch as the requirement of providing solvent security cannot be equated with furnishing a bank guarantee. The respondent no.1 only with a view to somehow block the refund as ordered by the appellate authority, has demanded bank guarantee, therefore, the order impugned deserves to be set aside.

10. A reply to the writ petition has been filed inter alia seeking to justify the original order, which came to be set aside by the appellate authority and that in the circumstances of the case the demand of bank guarantee is justified.

11. Learned counsel for the respondents supported the order impugned with reference to the order passed by the respondent no.1 inter alia seeking to safeguard the interest of the State while making refund and it was prayed that the petition be dismissed.

12. We have considered the submissions made by learned counsel for the parties and have perused the material available on record.

13. The order passed by the appellate authority while rejecting the prayer of the respondent on an application filed under Section 54 (11) of the Act, 2017 was very clear and specifically required the proper officer to process the application of refund as per the provisions of Act/Rules provided the petitioner furnishes the solvent security as per his satisfactio