Facts of the Case

The petitioner, M/s Maa Rajeshwari Construction Pvt. Ltd., 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 adverse order, but was unable to do so because the Tribunal had not yet been constituted. Consequently, the petitioner was also deprived of the statutory benefit of stay of recovery of the balance tax amount under Sections 112(8) and (9), which is ordinarily available upon deposit of the prescribed pre-deposit pending appeal. The State authorities had themselves acknowledged the non-constitution of the Tribunal through Notification bearing Order No.09/2019-State Tax, providing that the limitation period for filing a Tribunal appeal would begin only after 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) merely because the GST Appellate Tribunal has not been constituted by the government itself.
  2. On what terms should interim protection be granted pending constitution of the Tribunal?

Petitioner's Arguments

  • The petitioner sought multifarious relief, essentially praying that despite the non-constitution of the Tribunal, it should not be deprived of the stay of recovery that Section 112(8) and (9) would otherwise confer once an appeal is filed and the requisite deposit made.

Respondent's Arguments

  • The State respondents acknowledged the fact of non-constitution of the Tribunal and had already issued a removal-of-difficulties notification recognising that the limitation period for filing Tribunal appeals would only commence upon the Tribunal's President/State President entering office.

Court Order / Findings

  • The Court held that the petitioner could not be deprived of the statutory benefit of stay under Section 112(9) 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 (in addition to amounts already deposited under Section 107(6)), the recovery of the balance amount and any steps taken in that regard would be deemed stayed — following the Court's own precedent in SAJ Food Products Pvt. Ltd. v. State of Bihar.
  • The stay was made conditional and not open-ended: the petitioner was required to file its appeal under Section 112 once the Tribunal is constituted and made functional, observing the statutory requirements at that time.
  • If the petitioner chose not to avail the appeal remedy once the Tribunal became functional, the respondents would be at liberty to proceed further in accordance with law.
  • Any bank account attachment pursuant to the demand was directed to be released upon compliance with the 20% deposit condition.

Important Clarification

Where a statutory Appellate Tribunal under the GST law has not been constituted, a taxpayer cannot be denied the benefit of stay of recovery that Section 112(8)/(9) would confer upon filing an appeal and making the requisite pre-deposit. Courts will extend equivalent interim protection on deposit of the statutory percentage, while requiring the taxpayer to actually file the appeal once the Tribunal becomes functional.

Sections Involved

  • Section 112, Bihar GST Act, 2017 — provides for appeals to the Appellate Tribunal, and sub-sections (8) and (9) prescribe the pre-deposit and consequent stay of recovery of the balance amount.
  • Section 107(6), Bihar GST Act, 2017 — prescribes the pre-deposit for a first appeal before the Appellate Authority.
  • Section 172, Bihar GST Act, 2017 — the removal-of-difficulties power under which the notification extending limitation, pending constitution of the Tribunal, was issued.

Decision – In Favour of

The decision is disposed of with directions, in favour of the Assessee on the interim stay and bank attachment relief, while leaving the appeal itself to be filed once the Tribunal is constituted.

Case Details

Court: High Court of Judicature at Patna
Case No.: Civil Writ Jurisdiction Case No.9500 of 2023
Coram: Chief Justice K. Vinod Chandran and Justice Partha Sarthy
Date of Order: 10.07.2023

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