Facts of the Case

The petitioner, M/S Gaytri Pharma, a proprietorship firm based in Patna, filed a writ petition under Article 226 of the Constitution before the Patna High Court seeking to avail its statutory remedy of appeal against an adverse tax order before the GST Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax Act, 2017 ("BGST Act").

The difficulty faced by the petitioner was procedural rather than one going to the merits of the underlying tax demand: at the relevant time, the GST Appellate Tribunal contemplated under Section 109 of the BGST Act had not yet been constituted. As a result, the petitioner could neither file its second appeal nor claim the automatic stay of recovery of the balance disputed tax that Section 112(8) and (9) of the BGST Act ordinarily grant once the statutory pre-deposit is made and an appeal is filed.

The State respondents did not dispute this position. They had, in fact, already acknowledged the non-constitution of the Tribunal through Order No. 09/2019-State Tax dated 11.12.2019, issued under the removal-of-difficulties power in Section 172 of the BGST Act, which clarifies that the limitation period for filing an appeal before the Tribunal will run only from the date the Tribunal's President or State President enters office.

Issues Involved

  1. Whether a taxpayer can be deprived of the statutory stay on recovery of the balance disputed tax merely because the GST Appellate Tribunal has not yet been constituted by the government.
  2. What interim protection, if any, should be extended to a taxpayer who is otherwise entitled to file a second appeal under Section 112 of the BGST Act but is unable to do so for reasons attributable to the State.

Petitioner's Arguments

  • The petitioner was desirous of availing the statutory appellate remedy under Section 112 of the BGST Act but could not do so because the Tribunal had not been constituted.
  • Consequently, the petitioner was also being denied the benefit of stay of recovery of the balance tax amount under Section 112(8) and (9) of the BGST Act upon deposit of the amount contemplated therein.
  • Similar relief had already been granted by the same High Court in SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others (C.W.J.C. No. 15465 of 2022), and parity should be extended to the petitioner.

Respondent's Arguments

  • The State authorities did not seriously contest the factual position; they had themselves issued a notification acknowledging non-constitution of the Tribunal and extending the limitation period for filing appeals accordingly.
  • No specific counter-argument opposing interim protection is recorded in the order.

Court Order / Findings

  • The Division Bench held that the petitioner could not be deprived of the statutory benefit of stay merely because the respondents themselves had not constituted the Tribunal.
  • Subject to deposit of 20% of the remaining disputed tax amount (over and above what was already deposited under Section 107(6) at the first appellate stage), the petitioner was extended the benefit of stay under Section 112(9) of the BGST Act; recovery of the balance amount, and any steps already taken in that regard, were deemed stayed.
  • The stay was not left open-ended: the petitioner was directed to actually file the second appeal once the Tribunal is constituted and becomes functional, within the time to be specified upon such constitution.
  • If the petitioner chooses not to avail this remedy once the Tribunal is functional, the respondent-authorities were given liberty to proceed to recover the dues in accordance with law.
  • With these directions, the writ petition was disposed of.

Important Clarification

This order does not decide any question of GST law on merits — it is a procedural, template-style order of the kind Patna High Court (and several other High Courts) has passed for taxpayers caught between an unconstituted GST Appellate Tribunal and the department's recovery proceedings. The practical takeaway for taxpayers in a similar position is that courts have been willing to grant conditional stay of recovery — typically against payment of 20% of the disputed balance tax — pending constitution of the Tribunal, but this protection is time-bound and conditional on actually filing the appeal once the Tribunal is operational.

Sections Involved

  • Section 112 of the Bihar Goods and Services Tax Act, 2017 (appeal to the Appellate Tribunal)
  • Section 107(6) of the Bihar Goods and Services Tax Act, 2017 (pre-deposit for first appeal)
  • Section 109 of the Bihar Goods and Services Tax Act, 2017 (constitution of the Appellate Tribunal)
  • Section 172 of the Bihar Goods and Services Tax Act, 2017 (removal of difficulties)
  • Article 226 of the Constitution of India, 1950

Decision – In Favour of

Disposed of in favour of the petitioner to the limited extent of interim relief — conditional stay of recovery pending constitution of the GST Appellate Tribunal — without any decision on the merits of the underlying tax demand.

Case Details

Court: High Court of Judicature at Patna
Case No.: Civil Writ Jurisdiction Case No. 5190 of 2023
Coram: Hon'ble the Chief Justice K. Vinod Chandran and Hon'ble Mr. Justice Madhuresh Prasad
Date of Order: 24.04.2023

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