Case Law Details
Hariyana Trading Co. Vs State of Bihar (Patna High Court)
In a recent legal development, the Patna High Court addressed the case of Hariyana Trading Co. vs. State of Bihar, where the petitioner sought relief through a writ petition under Article 226 of the Indian Constitution. The petitioner’s primary objective was to challenge certain orders and notices related to tax demands. This article provides an overview and detailed analysis of the case, including the court’s decision and its implications.
1. Background of the Case: The petitioner filed a writ petition under Article 226 seeking various reliefs, including the quashing of orders and notices issued by the tax authorities.
2. Key Relief Sought: The petitioner expressed its desire to appeal against the impugned orders before the Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax Act (B.G.S.T. Act). However, due to the non-constitution of the Tribunal, the petitioner was unable to exercise this statutory remedy.
3. Challenges Due to Non-Constitution of Tribunal: The absence of a functional Tribunal prevented the petitioner from availing the benefit of stay on the recovery of the remaining tax amount, as provided under Section 112 (8) and (9) of the B.G.S.T. Act. This led to a situation where the petitioner was unable to obtain relief despite depositing a portion of the disputed tax amount.
4. Notification by State Authorities: The state authorities acknowledged the non-constitution of the Tribunal and issued a notification to address this issue. The notification clarified that the period of limitation for filing appeals before the Tribunal would commence only after the Tribunal’s constitution and the assumption of office by its President or State President.
5. Precedent in Angel Engicon Private Limited Case: The Patna High Court, in the case of Angel Engicon Private Limited vs. the State of Bihar & Anr., had already dealt with a similar issue. In that case, the court disposed of the writ petition with specific observations and directions.
6. Conditions for Stay: The court ruled that if the petitioner deposited a sum equal to 20% of the remaining disputed tax amount, in addition to the amount deposited earlier under Section 107 of the B.G.S.T. Act, they would be entitled to the statutory benefit of stay under Section 112 (9) of the B.G.S.T. Act. This would effectively stay the recovery of the balance tax amount.
7. Timeframe for Filing Appeal: To maintain a balance, the court emphasized that the relief of stay due to non-constitution of the Tribunal should not be indefinite. Therefore, it instructed the petitioner to file an appeal under Section 112 of the B.G.S.T. Act once the Tribunal becomes functional. This appeal should be filed following statutory requirements after the Tribunal’s establishment.
8. Conclusion: The case of Hariyana Trading Co. vs. State of Bihar highlights the challenges faced by taxpayers when statutory remedies are hindered by the non-constitution of appellate bodies like the Tribunal. The court’s decision to grant a stay upon the deposit of 20% of the disputed tax amount, along with the instruction to file an appeal once the Tribunal is operational, provides a practical resolution to such situations. This decision ensures that taxpayers can exercise their rights while maintaining a fair balance between their interests and the government’s revenue collection.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
The instant writ petition has been filed under Article 226 of the Constitution of India seeking following reliefs:-
“a) For issuance of writ in the nature of certiorari for quashing of the order dated 06.04.2002 issued vide memo number 123 Purnea by the respondent number 2 whereby the appeal preferred by the petitioner under section 107 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the central act 2017 for short) and Bihar Goods and Services Tax Act, 2017 (hereinafter referred to as the Bihar act 2017 for short) has been rejected;
b) For issuance of writ or order in the nature of certiorari for quashing of the order dated 10.02.2022 passed by the respondent number 3 under section 73 of the central act 2017 and Bihar act 2017 and also for quashing of the summary of order issued in form GST DRC-07 dated 10.02.2022 issued in terms of rule 142 (5) of the Central Goods and Services Tax Rules, 2017;
c) For the issuance of writ in the nature of certiorari for quashing of the notice of demand issued by the respondent number 3 in form GST DRC-13 vide process number 1213 dated 16.12.2022 and process number 98 dated 12.01.2023 served upon the banker and the purchaser attached with the petitioner for recovery of the amount of tax, interest and penalty determined in terms of the order dated 10.02.2022 and the appellate order dated 06.04.2022;
d) For holding and a declaration that the issuance of notice of demand issued in form GST DRC-13 in exercise of powers under section 79 of the central act 2017 the Bihar act 2017 while the application for rectification of the appellate order dated 06.04.2022 under section 161 of the central act 2017 being pending is illegal, without jurisdiction and bad in law;
e) For further restraining the respondents from taking any further coercive action against the petitioner for recovery of the amount of tax, interest and penalty in terms of the impugned orders as the whole proceeding initiated against the petitioner resulting in such orders is wholly without jurisdiction and unsustainable in the eye of law;
f) For further holding and a declaration that the petitioner cannot be denied the benefit of input tax credit in terms of section 16 (2) read with section 9 once the petitioner has already parted with the tax payable under central act 2017 and Bihar act 2017 in favour of the supplier against tax invoices and physical receipt of goods even if the supplier has defaulted in payment of such tax to the government;
g) For further holding and a declaration that it is the statutory responsibility of the respondent number 3 or the competent and jurisdictional authority having jurisdiction over the supplier of the petitioner to proceed against him for his failure to pay tax collected from the petitioner in terms of section 42 and 76 of the central act 2017 and Bihar act 2017;
h) For grant of any other relief or reliefs to which the petitioner is found entitled in the facts and circumstances of this case.”
The petitioner is desirous of availing statutory remedy of appeal against the impugned order before the Appellate Tribunal (hereinafter referred to as “Tribunal“) under Section 112 of the Bihar Goods and Services Tax Act (hereinafter referred to as “B.G.S.T. Act”).
However, due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act.
Under the circumstances, the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112.
The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S.O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office.
Considering the facts and circumstances noted above, this Court in the case of Angel Engicon Private Limited vs. the State of Bihar & Anr. passed in C.W.J.C No. 1920 of 2023 has disposed of the writ petition with certain observations and directions, allowing certain liberty to the petitioner, which reads as follows:
“If the petitioner makes a deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, then the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act, for he cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed.
The statutory relief of stay on deposit of the statutory amount, in the opinion of this Court, cannot be open ended. For balancing the equities, therefore, the Court is of the opinion that since order is being passed due to non-constitution of the Tribunal by the respondent-Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. The appeal would be required to be filed observing the statutory requirements after coming into existence of the Tribunal, for facilitating consideration of the appeal.
In case the petitioner chooses not to avail the remedy of appeal by filing any appeal under Section 112 of the B.G.S.T. Act before the Tribunal within the period which may be specified upon constitution of the Tribunal, the respondent- Authorities would be at liberty to proceed further in the matter, in accordance with law. With the above liberty, observation and directions, the writ application stands disposed of.”
The instant writ petition is disposed of in the same terms, allowing the petitioner liberty as has been granted to the petitioner in C.W.J.C. No. 1920 of 2023.
