Facts of the Case

The petitioner, Mateshwari Construction, a partnership firm holding GSTIN 10AAAAM9517H1ZV, sought to avail its statutory remedy of second appeal under Section 112 of the Bihar Goods and Services Tax Act against an order dated 26.12.2022 passed by the Additional Commissioner of State Tax (Appeal), Magadh Division, Gaya, in Appeal Case No. AB/GST-145/2021-22. However, due to non-constitution of the GST Appellate Tribunal, the petitioner was unable to file the appeal and consequently was deprived of the statutory stay of recovery of the balance disputed tax available under Section 112(8) and (9) of the BGST Act upon deposit of the prescribed pre-deposit amount.

Issues Involved

  1. Whether an assessee can be denied the benefit of statutory stay under Section 112(9) of the BGST Act merely because the Appellate Tribunal has not been constituted by the State.

Petitioner's Arguments

  • The petitioner was ready to avail the statutory remedy of appeal before the Tribunal but was prevented from doing so solely due to the respondents' own failure to constitute the Tribunal under Section 109 of the BGST Act.
  • The respondents' own notification (Order No. 09/2019-State Tax dated 11.12.2019) acknowledged the non-constitution and provided that limitation for filing the Tribunal appeal would run only from the date the President/State President enters office — yet no corresponding protection had been extended for the stay benefit under Section 112(9).

Respondent's Arguments

  • The State authorities acknowledged the fact of non-constitution of the Tribunal and had already issued the removal-of-difficulties notification addressing 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) merely due to non-constitution of the Tribunal by the respondents themselves, noting that similar relief had already been granted by the same High Court in SAJ Food Products Pvt. Ltd. v. State of Bihar (CWJC No. 15465 of 2022).
  • The Court directed that, subject to deposit of a further 20% of the remaining disputed tax (over and above the amount already deposited under Section 107(6)), the petitioner must be extended the statutory benefit of stay under Section 112(9), and recovery of the balance amount, along with any steps already taken, would be deemed stayed.
  • To balance equities, the Court clarified this stay is not open-ended: the petitioner would be required to actually file the second appeal once the Tribunal is constituted and functional, observing the statutory requirements; failing which, upon expiry of the specified period after constitution, the respondents would be at liberty to proceed with recovery in accordance with law.

Important Clarification

Non-constitution of the GST Appellate Tribunal by the State cannot be used to deprive an assessee of the statutory benefit of stay of recovery under Section 112(8)/(9) of the GST Act, provided the assessee deposits the pre-deposit amount (20% of the remaining disputed tax, over and above the amount deposited at the first appellate stage) that would otherwise be required to file the Tribunal appeal; however, such interim protection is conditional on the assessee actually filing the appeal once the Tribunal becomes functional.

Sections Involved

  • Section 112, BGST/CGST Act, 2017 — provides for appeal to the Appellate Tribunal and stay of recovery on deposit of prescribed pre-deposit.
  • Section 109, BGST Act, 2017 — provides for constitution of the State GST Appellate Tribunal.
  • Section 172, BGST Act, 2017 — empowers removal-of-difficulty notifications, invoked to address limitation issues arising from non-constitution of the Tribunal.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee — deemed stay of recovery was granted on deposit of the additional 20% pre-deposit, conditional on the petitioner filing the Tribunal appeal once it becomes functional.

Case Details

  • Court: High Court of Judicature at Patna
  • Case Number: CWJC No.7013 of 2023
  • CNR / Citation: CWJC No.7013 of 2023
  • Coram: Hon'ble the Chief Justice & Hon'ble Mr. Justice Madhuresh Prasad
  • Date of Order: 17 April 2023

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