Facts of the Case

The petitioner, M/s Pragati Enterprises, a proprietorship represented by Ashutosh Kumar, filed the present writ petition under Article 226 of the Constitution seeking multiple reliefs against an order it wished to challenge before the GST Appellate Tribunal ("the Tribunal") constituted under Section 112 of the Bihar Goods and Services Tax Act ("BGST Act"). Since the Tribunal had not yet been constituted, the petitioner was unable to avail its statutory remedy of appeal, or the accompanying benefit of stay of recovery of the balance disputed tax under Section 112(8) and (9) of the BGST Act, upon making the requisite pre-deposit. The State respondents acknowledged the non-constitution of the Tribunal and had issued a Removal of Difficulties order (Order No. 09/2019-State Tax, dated 11.12.2019) under Section 172 of the BGST Act, providing that limitation for filing a Tribunal appeal would run only from the date the Tribunal's President entered office.

Issues Involved

  1. Whether a taxpayer can be denied the statutory benefit of stay of recovery under Section 112(9) of the BGST Act merely because the Appellate Tribunal has not been constituted by the State.
  2. On what terms interim protection ought to be granted pending constitution of the Tribunal.

Petitioner's Arguments

  • Non-constitution of the Tribunal by the respondents themselves had deprived the petitioner of its statutory remedy of appeal and the accompanying stay benefit under Section 112(8) and (9) of the BGST Act.
  • Similar relief had already been granted by the same Court in SAJ Food Products Pvt. Ltd. v. The 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 the Removal of Difficulties notification dated 11.12.2019 issued under Section 172 of the BGST Act, which addressed the limitation aspect for filing appeals once the Tribunal became functional.

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 BGST Act merely because the Tribunal had not been constituted by the respondents themselves, and directed that, subject to deposit of 20% of the remaining disputed tax (over and above the deposit already made under Section 107(6) at the first-appeal stage), recovery of the balance amount shall be deemed stayed.
  • The Court balanced the equities by directing that the petitioner must file its Tribunal appeal once the Tribunal is constituted and its President or State President enters office, observing statutory timelines thereafter.
  • Liberty was reserved to the respondent authorities to proceed further in accordance with law if the petitioner failed to avail the appellate remedy once the Tribunal became functional.

Important Clarification

Non-constitution of the GST Appellate Tribunal by the State cannot be used to deny a taxpayer the interim stay benefit that Section 112(8)/(9) of the GST enactments would otherwise confer upon deposit of the pre-deposit amount; courts will treat the statutory stay as deemed to operate on deposit of the requisite percentage, while requiring the taxpayer to file the actual appeal once the Tribunal is functional.

Sections Involved

  • Section 107(6) of the BGST Act, 2017 – prescribes the pre-deposit for filing a first appeal.
  • Section 112(8) and (9) of the BGST Act, 2017 – prescribe the additional pre-deposit and consequent stay of recovery for a Tribunal appeal.
  • Section 109 of the BGST Act, 2017 – provides for constitution of the Appellate Tribunal.
  • Section 172 of the BGST Act, 2017 – empowers the government to issue orders removing difficulties, used here to extend limitation for Tribunal appeals.

Decision – In Favour of

The petition was disposed of in favour of the Assessee, granting interim stay of recovery of the balance disputed tax on deposit of 20% of the remaining amount, pending constitution of the GST Appellate Tribunal.

Case Details

  • Court: High Court of Judicature at Patna
  • Case Number: Civil Writ Jurisdiction Case No. 8165 of 2023
  • Coram: Hon'ble the Chief Justice K. Vinod Chandran and Hon'ble Mr. Justice Partha Sarthy
  • Date of Order: 19 June 2023

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