Facts of the Case

The petitioner, M/s Cohesive Infrastructure Developers Pvt. Ltd., through its Managing Director, filed a writ petition before the Patna High Court under Article 226 of the Constitution seeking multifarious reliefs against an order it wished to appeal before the GST Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax Act (“BGST Act”). However, since the Appellate Tribunal had not yet been constituted, the petitioner was unable to avail the statutory remedy of appeal, and consequently could not access the benefit of stay of recovery of the balance disputed tax available under Sub-sections (8) and (9) of Section 112 upon deposit of the prescribed amount. The State authorities had, by Notification bearing Order No. 09/2019-State Tax dated 11.12.2019 issued under Section 172 BGST Act, already acknowledged the Tribunal's non-constitution and provided that limitation for filing a Tribunal appeal would run only from the date the Tribunal's President or State President enters office.

Issues Involved

  1. Whether a taxpayer could be denied the statutory benefit of stay of recovery under Section 112(8) and (9) BGST Act merely because the Appellate Tribunal had not been constituted.
  2. What conditions should attach to any interim stay of recovery granted in lieu of the unavailable Tribunal remedy, and how long such stay should operate.

Petitioner's Arguments

  • The petitioner was desirous of availing the statutory appellate remedy under Section 112 BGST Act but was deprived of it solely due to non-constitution of the Tribunal.
  • This non-constitution, being entirely attributable to the respondent-authorities, should not deprive the petitioner of the benefit of stay of recovery of the balance disputed tax that would ordinarily follow from filing an appeal with the requisite pre-deposit under Section 112(8).
  • Reliance was placed on an earlier order of the same Court granting similar relief in SAJ Food Products Pvt. Ltd. v. State of Bihar & Others, C.W.J.C. No. 15465 of 2022.

Respondent's Arguments

  • The State respondents acknowledged the fact of non-constitution of the Tribunal and pointed to their own Notification (Order No. 09/2019-State Tax) clarifying that limitation for filing the Tribunal appeal would begin only once the Tribunal's President or State President assumes office.
  • No independent opposition to extending interim stay benefit is recorded beyond this acknowledgment.

Court Order/Findings

  • The petitioner cannot be deprived of the statutory benefit of stay under Section 112(9) BGST Act merely due to non-constitution of the Tribunal by the respondents themselves; subject to deposit of 20% of the remaining disputed tax (in addition to any amount already deposited under Section 107(6)), recovery of the balance amount stands deemed stayed.
  • The Court relied on its own precedent in SAJ Food Products Pvt. Ltd. v. State of Bihar, C.W.J.C. No. 15465 of 2022, granting similar relief.
  • The stay could not be open-ended: the petitioner was required to file the Tribunal appeal within the period to be specified once the Tribunal is constituted and made functional; failing that, the respondent-authorities would be at liberty to proceed with recovery in accordance with law.
  • Any bank account attachment made pursuant to the demand was directed to be released upon compliance with the order and payment of the 20% amount.

Important Clarification

  • Non-constitution of the GST Appellate Tribunal cannot be used to deny a taxpayer the substantive benefit of statutory stay of recovery that Section 112(9) BGST Act would otherwise confer upon filing an appeal with the prescribed pre-deposit.
  • Such interim relief is conditional and time-bound: deposit of 20% of the remaining disputed tax secures a stay only until the Tribunal becomes functional, after which the taxpayer must actually file the appeal within the period then specified, failing which recovery may resume.

Sections Involved

  • Section 107, Bihar Goods and Services Tax Act, 2017 — first appellate remedy and pre-deposit requirement under sub-section (6).
  • Section 109, Bihar Goods and Services Tax Act, 2017 — constitution of the GST Appellate Tribunal.
  • Section 112, Bihar Goods and Services Tax Act, 2017 — appeal to the Appellate Tribunal, including the pre-deposit and automatic stay provisions under sub-sections (8) and (9).
  • Section 172, Bihar Goods and Services Tax Act, 2017 — power to remove difficulties, under which the limitation notification was issued.

Decision – In Favour of

The decision is in favour of the Assessee. The Patna High Court held that the taxpayer could not be denied the statutory benefit of stay of recovery merely because of the State's own failure to constitute the Appellate Tribunal, and granted a conditional stay on deposit of 20% of the disputed tax, along with release of any bank attachment.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No. 15438 of 2023
  • CNR: Not available
  • Coram: Hon'ble the Chief Justice K. Vinod Chandran and Hon'ble Mr. Justice Rajiv Roy
  • Decision Date: 30 October 2023
  • Disposal Nature: Disposed of with directions – statutory stay of recovery granted

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