Facts of the Case

Green Fizz Beverages Private Limited, the writ petitioner and appellant, filed an intra-court appeal against the order dated 18.07.2022 passed in W.P.A. No. 15484 of 2022.

The original writ petition challenged an appellate order dated 21.12.2018 passed by the Senior Joint Commissioner of State Tax Appeals, Central Section, Kolkata and Bureau of Investigation, Unit-II.

The learned Single Bench dismissed the writ petition on the ground that it had been filed after a delay of approximately 3½ years.

The appellant explained that against the order of the first appellate authority, a further appeal lay before the GST Tribunal. However, the Tribunal had not yet been constituted in the State of West Bengal. The appellant therefore contended that limitation would begin to run only after issuance of a notification constituting the Tribunal.

The underlying dispute concerned classification of the product manufactured and marketed by the appellant, namely whether the product was:

  • a carbonated beverage with fruit juice, or
  • a carbonated beverage.

The Division Bench treated this classification controversy as a recurrent issue requiring adjudication on merits.

Issues Involved

The principal issues before the Division Bench were:

  1. Whether the writ petition could be dismissed solely because it was filed after a delay of approximately 3½ years.
  2. Whether non-constitution of the GST Tribunal left the appellant without an effective statutory appellate remedy and thereby compelled recourse to writ jurisdiction under Article 226 of the Constitution of India.
  3. Whether the appellant’s argument that limitation would commence only after notification constituting the GST Tribunal was legally acceptable.
  4. Whether delay and laches should be determined merely by counting the length of time taken to approach the Court.
  5. Whether the recurring classification dispute concerning carbonated beverage with fruit juice versus carbonated beverage required adjudication on merits.
  6. Whether restoration of the writ petition should be made subject to conditions concerning deposit of disputed tax and furnishing of security for the balance amount.

Petitioner / Appellant’s Arguments

The appellant principally contended that:

  • the order of the first appellate authority was further appealable before the GST Tribunal;
  • the GST Tribunal had not yet been constituted in the State of West Bengal;
  • because the Tribunal was unavailable, the appellant could not pursue the statutory appellate remedy;
  • limitation should therefore begin to run only after issuance of a notification constituting the Tribunal;
  • the appellant was effectively compelled to invoke the High Court’s jurisdiction under Article 226 of the Constitution of India; and
  • the substantive classification dispute deserved adjudication rather than rejection of the writ petition solely on the ground of delay.

The appellant had already deposited 10% of the disputed tax while filing the appeal before the first appellate authority. The Court also noted that, had the Tribunal been constituted and an appeal been filed before it, the appellant would have deposited a further 20% of the disputed tax.

Respondents’ / State’s Position

The State was represented before the Division Bench by learned Government counsel.

The judgment records that proper adjudication of the classification dispute required the respondents to place their stand before the Court through an affidavit. The Court observed that, without such affidavit from the respondents, it would not be in a position to render a binding decision on the classification controversy.

Accordingly, after restoring the writ petition subject to conditions, the Court directed the appropriate respondent to file an affidavit-in-opposition within 12 weeks from the date on which the appellant complied with the prescribed conditions.

Court’s Findings

The Division Bench did not accept the appellant’s submission that limitation would start running only after a notification constituting the GST Tribunal was issued.

However, the Court simultaneously held that it could not agree with the learned Single Bench’s conclusion dismissing the writ petition solely on the ground of 3½ years’ delay.

The Court made the following important findings:

  • The underlying dispute was a classification dispute concerning whether the appellant’s product was a carbonated beverage with fruit juice or a carbonated beverage.
  • The classification issue was a recurrent issue.
  • The GST Tribunal, being the last fact-finding authority, would provide not merely an efficacious but also an effective appellate remedy.
  • Since the Tribunal had not been constituted, the appellant was left without that remedy and was compelled to approach the High Court under Article 226 of the Constitution of India.
  • Delay and laches cannot be calculated solely by the length of time taken by a party to approach the legal forum.
  • Ordinarily, no party stands to benefit by filing an appeal or petition belatedly.
  • There was no allegation or material showing that the appellant had approached the Court belatedly because of mala fide intention or ulterior motive.
  • The appellant had already deposited 10% of the disputed tax before the first appellate authority.
  • Had the Tribunal been constituted, the appellant would have deposited a further 20% of the disputed tax for pursuing the Tribunal remedy.
  • Since the controversy involved classification of goods, substantive adjudication was required.
  • A binding decision on classification could not properly be rendered unless the respondents filed their affidavit.
  • In the peculiar facts and circumstances, the writ petition ought to be heard and decided on merits rather than rejected merely on delay and laches, though restoration was made conditional.

Court Order / Final Directions

The Division Bench allowed the appeal and restored the writ petition to the file of the High Court, subject to specific conditions:

  • The appellant was directed to pay 20% of the balance disputed tax within six weeks from the date of receipt of the server copy of the judgment and order.
  • The appellant was also required to furnish a bond to the satisfaction of the appropriate authority for the balance amount of disputed tax.
  • Upon compliance with both conditions, the appellant would be entitled to be heard in the restored writ petition.
  • The appropriate respondent was directed to file an affidavit-in-opposition within 12 weeks from the date of the appellant’s compliance with the conditions.
  • If the conditions were complied with, no coercive action could be taken against the appellant for recovery of the balance amount of tax, penalty and cess.
  • The Court expressly clarified that it had not gone into the merits of the matter while deciding the intra-court appeal.
  • No order as to costs was made.

Important Clarification

This judgment contains several significant clarifications.

First, the Court did not accept the proposition that limitation automatically begins only after a notification constituting the GST Tribunal is issued. Therefore, the decision should not be read as laying down an absolute rule that limitation remains suspended until constitution of the Tribunal.

Second, the Court held that delay and laches are not to be assessed solely by mechanically counting the number of years or months taken to approach the Court. The surrounding circumstances, availability of an effective statutory forum, conduct of the litigant, absence or presence of mala fides, and nature of the dispute remain relevant.

Third, where the GST Tribunal is not constituted, and the litigant is thereby deprived of an effective appellate forum, recourse to writ jurisdiction under Article 226 of the Constitution of India may require consideration in the peculiar facts and circumstances rather than outright rejection solely on delay.

Fourth, the underlying dispute concerned the substantive GST classification of the appellant’s product as a carbonated beverage with fruit juice or a carbonated beverage. The Division Bench did not finally decide this classification issue.

Fifth, the Court restored the writ petition on conditions broadly reflecting the tax-security consequences that would have arisen had the statutory Tribunal remedy been available: the appellant had already deposited 10% of disputed tax before the first appellate authority, and the Court imposed a further condition of payment of 20% of the balance disputed tax, together with a bond for the remaining disputed amount.

Sections / Provisions Involved

Article 226 of the Constitution of India — jurisdiction invoked because the appellant contended that the GST Tribunal had not been constituted and an effective further appellate remedy was unavailable.

GST Appellate Tribunal Framework — relevant because the Court treated the Tribunal as the last fact-finding authority and regarded the Tribunal remedy as both efficacious and effective.

GST Classification Provisions / Tariff Classification Framework — substantively relevant to the unresolved dispute whether the appellant’s product constituted a carbonated beverage with fruit juice or a carbonated beverage. The judgment itself, however, does not specify a particular HSN heading or tariff entry and does not finally determine classification.

Delay and Laches in Writ Jurisdiction — central to the appeal against dismissal of the writ petition after approximately 3½ years.

Pre-deposit / Disputed Tax Deposit Framework — relevant to the Court’s consideration that 10% had already been deposited before the first appellate authority and that a further deposit would have arisen if the Tribunal remedy had been available.

Link to download the order -

https://mytaxexpert.co.in/uploads/1783318203_1102compressed.pdf 

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