2013 (2) TMI 615 - HC - VAT and Sales Tax

Bank guarantee for release of boat detained - order for levying penalty forwarded to the Bank and the Bank guarantee encashed - assessee contested against non communication of penalty order to him - Held that - Penalty order was issued from the office of the 1st respondent only on 7/1/13. However respondents have no material to prove that this order has so far been served on the petitioner. Therefore prima facie there is force in the contention of the petitioner that it was without serving a copy of the order on the petitioner the bank guarantee furnished by them is sought to be enforced. In such circumstances directing that further proceedings in pursuance to Ext.P4 for the encashment of the bank guarantee will stand stayed for a period of one month from today. In the meantime it will be open to the petitioner to obtain a copy of Ext.P4 and pursue the statutory remedies that are available to them. It is also directed that if the period of the bank guarantee expires in the meanwhile petitioner shall keep the bank guarantee alive.

Summary

Issues:
1. Enforcement of bank guarantee without communication of order to petitioner.

Analysis:
The judgment by the High Court of Kerala pertains to proceedings initiated against the petitioner under Section 47 of the KVAT Act, where a bank guarantee was furnished by the petitioner and a detained boat was released. Subsequently, an order (Ext.P4) was passed levying a penalty, dated 30/6/12, but not communicated to the petitioner. The petitioner, in the writ petition, raised concerns over the enforcement of the bank guarantee without receiving a copy of the order. The Government Pleader confirmed that the order was issued on 7/1/13 but could not prove its service to the petitioner. The court acknowledged the petitioner's contention that enforcing the bank guarantee without serving the order was unjust. Consequently, the court stayed further proceedings for one month from the judgment date, allowing the petitioner to obtain a copy of Ext.P4 and explore statutory remedies. The petitioner was also directed to keep the bank guarantee active if it expired during this period.

This judgment highlights the importance of due process and communication in legal proceedings. It underscores the principle that parties must be informed of orders affecting their rights before any enforcement actions are taken. The court's decision to stay the encashment of the bank guarantee reflects a fair approach to ensure the petitioner's rights are protected. It also emphasizes the petitioner's right to access relevant documents and pursue available remedies within the legal framework. The judgment serves as a reminder of the procedural safeguards in place to prevent arbitrary actions and uphold the principles of natural justice in legal matters.