Facts of the Case

The petitioner, M/s Meraki Interactive, a partnership firm carrying on business at Rajendra Nagar, Patna, represented by its partner Sujay Basak, filed a writ petition under Article 226 of the Constitution in the context of its inability to avail the statutory appellate remedy before the GST Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax Act, 2017, because the Tribunal had not yet been constituted. Consequently, the petitioner was also unable to avail the automatic stay of recovery of the balance tax amount under Sections 112(8) and 112(9) of the B.G.S.T. Act that would ordinarily follow the requisite pre-deposit. The State respondents had themselves acknowledged the non-constitution of the Tribunal through a removal-of-difficulties notification (Order No. 09/2019-State Tax, S.O. 399 dated 11.12.2019) issued under Section 172 of the Act, providing that limitation for filing a Tribunal appeal would run only from the date the Tribunal's President enters office.

Issues Involved

  1. Whether a taxpayer can be denied the statutory benefit of stay of recovery under Section 112(9) of the B.G.S.T. Act merely because the GST Appellate Tribunal has not yet been constituted.
  2. What interim protection, if any, should be extended to the petitioner pending constitution of the Tribunal.

Petitioner's Arguments

  • The petitioner was desirous of availing its statutory remedy of appeal before the Appellate Tribunal under Section 112 of the B.G.S.T. Act but was deprived of that remedy solely because the Tribunal had not been constituted.
  • As a consequence, the petitioner was also deprived of the benefit of automatic stay of recovery of the balance tax under Section 112(8) and (9) upon making the requisite pre-deposit.
  • The petitioner relied on the State's own removal-of-difficulties notification acknowledging non-constitution of the Tribunal, and on a coordinate bench decision in SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others, where similar relief had been granted.

Respondent's Arguments

  • The State respondents did not dispute the factual position regarding non-constitution of the Tribunal; their own notification under Section 172 of the Act recorded this and provided that the limitation period for filing a Tribunal appeal would begin only once the Tribunal's President assumes office.

Court Order/Findings

  • The Court held that the petitioner could not be deprived of the statutory benefit of stay under Section 112(9) of the B.G.S.T. Act merely because the respondents themselves had failed to constitute the Tribunal.
  • On deposit of a further 20% of the remaining disputed tax (over and above the amount already deposited under Section 107(6)), recovery of the balance amount, and any steps already taken in that regard, would stand deemed stayed; any attached bank account would be released on compliance.
  • The stay was not left open-ended: the petitioner would be required to actually file the Tribunal appeal once the Tribunal is constituted and functional, failing which the respondents would be at liberty to proceed with recovery in accordance with law.
  • With this liberty, observation and set of directions, the writ petition was disposed of.

Important Clarification

  • Non-constitution of the GST Appellate Tribunal cannot be used to deny a taxpayer the automatic stay of recovery that Section 112(9) of the GST Act would otherwise confer on pre-deposit.
  • Such interim protection is conditional and time-bound — the taxpayer must file the Tribunal appeal once the Tribunal becomes functional, or risk the department resuming recovery.

Sections Involved

  • Section 112 of the Bihar Goods and Services Tax Act, 2017 — provides for appeal to the Appellate Tribunal and stay of recovery of disputed tax on pre-deposit.
  • Section 107(6) of the B.G.S.T. Act, 2017 — prescribes the pre-deposit required for filing a first appeal.
  • Section 172 of the B.G.S.T. Act, 2017 — removal of difficulties provision under which the government extended limitation for Tribunal appeals.

Decision – In Favour of

Disposed of with directions, substantially in favour of the Assessee — the petitioner secured a conditional stay of recovery on payment of 20% of the disputed balance, pending constitution of the Tribunal.

Related Case Laws

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

Case Details

  • Court: Patna High Court
  • Case No.: Civil Writ Jurisdiction Case No.14154 of 2023
  • CNR: Not available on record
  • Coram: Chief Justice K. Vinod Chandran and Justice Rajiv Roy
  • Decision Date: 03.10.2023
  • Disposal Nature: Disposed of with directions

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