Facts of the Case

The petitioner, Annamalai Arunachalam, Proprietor of M/s Vittuniyar Agencies, challenged the appellate orders passed under the GST enactments relating to the assessment years 2018-19 and 2019-20.

The First Appellate Authority partly modified the assessment order for 2018-19, while it upheld the assessment order for 2019-20 in its entirety. Aggrieved by these appellate orders, the petitioner intended to file second appeals before the GST Appellate Tribunal (GSTAT). However, since the Tribunal had not yet been constituted, the petitioner was unable to avail the statutory appellate remedy.

Meanwhile, the department initiated recovery proceedings, including recovery notices, for realization of the disputed tax demand. The petitioner therefore approached the Kerala High Court seeking protection from coercive recovery until the GST Appellate Tribunal became functional.

 

Issues Involved

  1. Whether recovery proceedings can continue when the GST Appellate Tribunal has not yet been constituted.
  2. Whether the assessee should be granted protection from recovery pending constitution of the Tribunal.
  3. Whether deposit of 20% of the remaining disputed tax under Section 112(8)(b) of the CGST/SGST Act should be treated as sufficient compliance for filing an appeal before the Tribunal once constituted.

 

Petitioner’s Arguments

  • The petitioner submitted that the statutory remedy of appeal before the GST Appellate Tribunal was unavailable solely because the Tribunal had not yet been constituted.
  • Since the inability to file an appeal was beyond the petitioner's control, coercive recovery proceedings should remain suspended.
  • The petitioner sought protection against recovery till the Tribunal became operational so that the statutory right of appeal could be effectively exercised.

 

Respondent’s Arguments

  • The State contended that Section 112 of the CGST/SGST Act prescribes a mandatory pre-deposit of 20% of the remaining disputed tax for maintaining an appeal before the GST Appellate Tribunal.
  • The Government argued that if any interim protection against recovery was to be granted, the petitioner should first comply with the statutory requirement by depositing the amount specified under Section 112(8)(b).

 

Court Order / Findings

The Kerala High Court disposed of the writ petition with the following directions:

  • The petitioner shall deposit the amount payable under Section 112(8)(b) of the CGST/SGST Act, equivalent to 20% of the remaining disputed tax, within one month.
  • Upon such deposit, all recovery proceedings relating to the assessment years 2018-19 and 2019-20 shall remain kept in abeyance.
  • Once the GST Appellate Tribunal is constituted, the petitioner shall not be required to make any further pre-deposit for maintaining the statutory appeal, as the deposit made pursuant to the High Court's order shall be treated as sufficient compliance.
  • Recovery proceedings shall remain stayed up to two months after the constitution of the GST Appellate Tribunal, after which the petitioner shall be governed by any interim orders passed by the Tribunal.
  • Any amount already recovered shall be treated as provisional, subject to the outcome of the appeal before the GST Appellate Tribunal.

 

Important Clarification

  • Non-constitution of the GST Appellate Tribunal cannot deprive an assessee of the statutory right of appeal.
  • Deposit made under Section 112(8)(b) pursuant to the High Court's directions shall satisfy the statutory pre-deposit requirement when the appeal is eventually filed.
  • Recovery proceedings should remain suspended upon compliance with the prescribed pre-deposit until the Tribunal becomes functional.
  • Amounts already recovered shall remain subject to the final decision of the GST Appellate Tribunal.

 

Sections Involved

  • Section 74(9), Central Goods and Services Tax Act, 2017
  • Section 112, Central Goods and Services Tax Act, 2017
  • Section 112(8)(b), Central Goods and Services Tax Act, 2017
  • Corresponding provisions of the Kerala State Goods and Services Tax Act, 2017

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1782969974_88compressed.pdf

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