Facts of the Case

The petitioner, Mateshwari Construction, a partnership firm registered under GSTIN 10AAAAM9517H1ZV, sought to avail its statutory remedy of appeal before the GST Appellate Tribunal 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. Since the Tribunal had not been constituted under Section 109 of the BGST Act, the petitioner was unable to file the second appeal and, consequently, could not avail the statutory stay of recovery of the balance disputed tax ordinarily available under Section 112(8) and (9) upon deposit of the prescribed pre-deposit.

Issues Involved

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

Petitioner's Arguments

  • The petitioner was ready to pursue the statutory remedy of second appeal but was prevented from doing so purely due to the respondents' own default in constituting the Tribunal under Section 109 of the BGST Act.
  • The State's own removal-of-difficulties notification (Order No. 09/2019-State Tax dated 11.12.2019) recognised the non-constitution and provided that limitation for filing the Tribunal appeal would run only from the date the President/State President enters office.

Respondent's Arguments

  • The State authorities acknowledged the non-constitution of the Tribunal and had already addressed the limitation aspect through the removal-of-difficulties notification.

Court Order / Findings

  • Relying on its own precedent in SAJ Food Products Pvt. Ltd. v. State of Bihar (CWJC No. 15465 of 2022), the Court held that the petitioner could not be deprived of the statutory stay benefit under Section 112(9) merely due to non-constitution of the Tribunal by the respondents themselves.
  • The Court directed that, subject to deposit of an additional 20% of the remaining disputed tax (over and above the amount already deposited under Section 107(6) at the first appellate stage), the petitioner would be extended the statutory benefit of stay under Section 112(9), with recovery of the balance amount deemed stayed.
  • To balance equities, the Court clarified this protection is not open-ended: the petitioner must actually file the second appeal once the Tribunal is constituted and functional, observing the statutory requirements; if the petitioner chooses not to avail this remedy within the period specified upon constitution of the Tribunal, the respondents would be at liberty to proceed further in accordance with law.

Important Clarification

Non-constitution of the GST Appellate Tribunal cannot be allowed to defeat an assessee's statutory entitlement to stay of recovery under Section 112(8)/(9) of the GST Act; courts will grant a deemed stay on deposit of the pre-deposit that would otherwise be payable to invoke the Tribunal's jurisdiction, but will condition this relief on the assessee actually filing the Tribunal appeal once it becomes functional, failing which the department regains liberty to recover.

Sections Involved

  • Section 112, BGST/CGST Act, 2017 — provides for appeal to the Appellate Tribunal and stay of recovery on deposit of pre-deposit.
  • Section 109, BGST Act, 2017 — provides for constitution of the State GST Appellate Tribunal.
  • Section 172, BGST Act, 2017 — the removal-of-difficulties power invoked to address limitation consequences of non-constitution.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee — deemed stay of recovery granted on an additional 20% pre-deposit, conditional on filing the Tribunal appeal once constituted.

Case Details

  • Court: High Court of Judicature at Patna
  • Case Number: CWJC No.3425 of 2023
  • CNR / Citation: CWJC No.3425 of 2023
  • Coram: Hon'ble the Chief Justice K. Vinod Chandran & Hon'ble Mr. Justice Madhuresh Prasad
  • Date of Order: 3 May 2023

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