Facts of the Case

The petitioner, Alavumkudy Moosan Alshas, was subjected to an assessment order referred to in the judgment as Ext.P1.

The assessment order related to the year 2017-18 and had been issued by the State Tax Officer.

Aggrieved by the assessment order, the petitioner preferred an appeal before the Joint Commissioner (Appeals), State Goods and Services Tax Department.

The appellate proceedings resulted in Ext.P3 appellate order dated 13 June 2022, whereby the original assessment order was partially modified in favour of the petitioner.

Despite obtaining partial relief in appeal, the petitioner remained aggrieved by the appellate order.

The petitioner intended to challenge Ext.P3 by filing a further appeal under Section 112 of the CGST/SGST Acts before the Goods and Services Tax Appellate Tribunal.

However, the petitioner was unable to exercise the statutory appellate remedy because the GST Appellate Tribunal had not been constituted.

In these circumstances, the petitioner approached the Kerala High Court seeking appropriate protection against demands arising from the original assessment order as modified by the appellate order.

Issues Involved

The principal issues before the High Court were:

  1. Whether the petitioner should be protected against recovery of GST demand when the statutory appeal under Section 112 could not be filed because the GST Appellate Tribunal had not been constituted.
  2. Whether the demands arising from the assessment order, as modified by the first appellate order, could be kept in abeyance subject to compliance with the statutory payment requirement under Section 112(8)(b) of the CGST/SGST Acts.
  3. Whether the petitioner was required to deposit 20% of the disputed tax for obtaining protection against recovery pending constitution of the GST Appellate Tribunal.
  4. Whether an amount deposited pursuant to the High Court’s directions could later be treated as payment in compliance with Section 112(8)(b) when the GST Appellate Tribunal was constituted and a statutory appeal was filed.

Petitioner’s Arguments

The petitioner’s principal grievance was that Ext.P1 assessment order had been only partially modified in the petitioner’s favour by Ext.P3 appellate order.

The petitioner remained aggrieved by the first appellate order and intended to challenge it through a further statutory appeal under Section 112 of the CGST/SGST Acts.

However, the petitioner submitted that such an appeal could not be filed because the Goods and Services Tax Appellate Tribunal had not been constituted.

Thus, the petitioner was placed in a position where:

  • a further statutory appellate remedy was contemplated under the GST enactments;
  • the petitioner wished to challenge the first appellate order;
  • the appellate forum was unavailable due to non-constitution of the Tribunal; and
  • demands arising from the assessment order as modified by the appellate order remained enforceable.

The petitioner therefore approached the High Court for appropriate relief in the absence of a functioning GST Appellate Tribunal.

Respondents’ Arguments

The learned Government Pleader submitted that, although the Goods and Services Tax Appellate Tribunal had not been constituted, the demands against the petitioner could be stayed only if the petitioner remitted the amount payable for maintaining an appeal before the Tribunal in terms of Section 112(8)(b) of the CGST/SGST Acts.

It was specifically submitted on behalf of the respondents that the petitioner was liable to deposit:

20% of the disputed tax

for maintaining an appeal under Section 112 of the CGST/SGST Acts.

Accordingly, the State’s position was that protection against recovery should be conditional upon payment of the statutory amount corresponding to the requirement for a Tribunal appeal.

Court Order / Findings

The Kerala High Court heard the learned counsel appearing for the petitioner and the learned Senior Government Pleader appearing for the respondents.

The Court disposed of the writ petition by granting conditional protection against recovery.

The High Court directed that:

Any demands raised against the petitioner in terms of Ext.P1 assessment order, as modified by Ext.P3 appellate order, shall be kept in abeyance.

However, this protection was made subject to the condition that:

The petitioner must remit the amount payable under Section 112(8)(b) of the CGST/SGST Acts within one month from the date of receipt of a certified copy of the judgment.

The Court further clarified the position for the future constitution of the GST Appellate Tribunal.

It held that, as and when the Goods and Services Tax Appellate Tribunal was constituted:

  • it would be open to the petitioner to challenge Ext.P3 appellate order by filing an appeal; and
  • any amount paid by the petitioner pursuant to the High Court’s directions would be treated as an amount paid in compliance with Section 112(8)(b) of the CGST/SGST Acts.

Accordingly, the writ petition was disposed of with these directions.

Important Clarification

The judgment contains several important legal and practical clarifications.

1. Non-Constitution of GST Appellate Tribunal Did Not Leave the Petitioner Without Interim Protection

The petitioner was unable to file a further statutory appeal under Section 112 because the GST Appellate Tribunal had not been constituted.

The High Court therefore granted conditional protection by keeping the demand in abeyance.

2. Stay of Recovery Was Not Unconditional

The High Court did not grant an absolute or unconditional stay of the tax demand.

The protection was expressly conditional upon the petitioner remitting the amount payable under Section 112(8)(b) within one month from receipt of a certified copy of the judgment.

3. Respondents Specifically Submitted That 20% of Disputed Tax Was Payable

The judgment records the Government Pleader’s submission that the petitioner was liable to deposit 20% of the disputed tax for maintaining an appeal under Section 112.

The Court’s operative direction itself requires payment of the amount payable under Section 112(8)(b).

Therefore, the case should accurately be reported as conditional recovery protection linked to statutory appellate pre-deposit requirements.

4. Payment Made Under High Court Direction Was Protected for Future Tribunal Appeal

A particularly important clarification is that the amount paid pursuant to the High Court’s direction would not become irrelevant once the Tribunal was constituted.

The Court expressly directed that such payment would be treated as payment in compliance with Section 112(8)(b) when the petitioner later challenged Ext.P3 before the GST Appellate Tribunal.

5. The High Court Did Not Decide the Merits of the Tax Assessment

The judgment does not adjudicate the correctness of:

  • the original assessment order;
  • the taxable liability determined against the petitioner;
  • the partial modification granted by the first Appellate Authority; or
  • the substantive merits of the proposed second appeal.

The relief was directed at the procedural difficulty arising from the non-constitution of the GST Appellate Tribunal.

Sections and Legal Provisions Involved

Section 112 of the CGST/SGST Acts – Appeal to the Appellate Tribunal

Section 112 governs appeals to the GST Appellate Tribunal.

The petitioner intended to challenge the first appellate order under this statutory mechanism but was unable to do so because the Tribunal had not been constituted.

The unavailability of the appellate forum was the central circumstance leading to the writ petition.

Section 112(8)(b) of the CGST/SGST Acts – Statutory Payment for Tribunal Appeal

Section 112(8)(b) was the key statutory provision considered by the High Court.

The respondents contended that protection against recovery should be available only upon remittance of the amount payable for maintaining a Tribunal appeal under this provision.

The High Court accepted the framework of conditional protection and directed the petitioner to remit the amount payable under Section 112(8)(b) within one month.

The Court also directed that such payment would later be recognised as compliance with Section 112(8)(b) when the Tribunal was constituted and the petitioner filed an appeal.

Order in WP(C) No. 26638 of 2021 dated 26 November 2021 – Kerala High Court

The appendix to the present judgment records that the petitioner produced as Exhibit P4 a copy of the order dated 26 November 2021 in WP(C) No. 26638 of 2021 of the Kerala High Court.

This proceeding is therefore a connected judicial authority/document forming part of the petitioner’s exhibits.

Link to Download the Order-https://mytaxexpert.co.in/uploads/1783492645_1509compressed.pdf

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