Facts of the Case

The petitioner, Sri A. Bhupal Reddy, a contractor, challenged an appellate order dated 31.01.2024 passed by the Joint Commissioner of Commercial Taxes (Appeals), Davanagere, and sought a mandamus for refund of excess tax, interest and penalty collected from him. The petitioner approached the Karnataka High Court because the GST Appellate Tribunal, though notified under the Karnataka Goods and Services Tax Act, 2017, had not yet commenced functioning, leaving him without a forum to pursue his statutory second appeal.

Issues Involved

  1. Whether a taxpayer who has deposited 30% of the disputed tax amount, exceeding the mandatory 20% pre-deposit under Section 112(8)(a), is entitled to the deemed stay on recovery under Section 112(9) of the KGST Act despite the Tribunal not being constituted.
  2. What relief and timeline should apply pending constitution of the GST Appellate Tribunal.

Petitioner's Arguments

  • The petitioner had already deposited 30% of the disputed tax amount even before filing the writ petition, exceeding the 20% pre-deposit mandated under Section 112(8)(a) of the KGST Act.
  • Having made this deposit, the petitioner was entitled to the benefit of the deemed stay on recovery of the balance amount under Section 112(9) of the KGST Act.

Respondent's Arguments

  • The State's counsel did not seriously contest the entitlement to the deemed stay given the deposit already made, the matter turning essentially on procedural directions pending the Tribunal's constitution.

Court Order / Findings

  • The Court held that on deposit of 30% of the disputed tax amount, exceeding the statutory 20% pre-deposit under Section 112(8)(a), recovery proceedings for the balance amount are deemed stayed under Section 112(9) of the KGST Act, notwithstanding the Tribunal's non-constitution.
  • The benefit of Section 112(9) was extended to the petitioner until 60 days after the GST Appellate Tribunal commences functioning, within which period the petitioner must file the necessary appeal.
  • Failure to file the appeal within that window would result in loss of the Section 112(9) benefit; all contentions were kept open.

Important Clarification

  • A taxpayer who deposits the mandatory pre-deposit percentage (or more) under Section 112(8)(a) is entitled to a deemed stay of recovery of the balance disputed amount under Section 112(9), even though the GST Appellate Tribunal has not been constituted or made functional.
  • Such stay is time-bound and conditional on filing the second appeal within 60 days of the Tribunal actually commencing work, failing which the protection lapses.

Sections Involved

  • Section 112(8)(a), KGST Act, 2017 - mandatory pre-deposit for filing a second appeal before the Appellate Tribunal.
  • Section 112(9), KGST Act, 2017 - deemed stay of recovery of balance amount on payment of pre-deposit.

Decision – In Favour of

Decided in favour of the assessee; deemed stay under Section 112(9) extended pending Tribunal constitution.

Case Details

  • Court: High Court of Karnataka at Dharwad
  • Case No.: WP No. 102073 of 2024 (T-RES)
  • Coram: Justice Suraj Govindaraj
  • Date: 23rd September, 2025

Link to Download the Order

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