Non-Constitution of GST Appellate Tribunal: Patna HC grants relief to Petitioner

Cohesive Infrastructure Developers Pvt. Ltd. Vs Central Board of Indirect Taxes and Customs (Patna High Court)

Introduction: In a recent judgment by the Patna High Court, Cohesive Infrastructure Developers Pvt. Ltd. sought relief under Article 226, highlighting the deprivation of statutory remedy due to the non-constitution of the Appellate Tribunal. The petitioner aimed to appeal against an order under Section 112 of the Bihar Goods and Services Tax Act (B.G.S.T. Act) but faced obstacles due to the absence of the Tribunal.

Detailed Analysis: The crux of the matter was the petitioner’s desire to avail the statutory remedy of appeal under Section 112 of the B.G.S.T. Act. However, the non-existence of the Tribunal hindered this process, preventing the petitioner from enjoying benefits under Sub-Section (8) and Sub-Section (9) of Section 112, including the stay of recovery of the balance amount of tax.

The respondent State authorities acknowledged the situation and issued a notification, recognizing the non-constitution of the Tribunal. The notification stated that the period of limitation for appealing before the Tribunal would commence after the Tribunal’s president, or the state president, enters office post its constitution under Section 109 of the B.G.S.T. Act.

The Patna High Court, considering the circumstances, disposed of the writ petition with the following key points:

1. Statutory Benefit of Stay: Subject to depositing 20 percent of the remaining disputed tax amount (if not already deposited), the petitioner was granted the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The Court emphasized that the petitioner cannot be deprived of this benefit due to the non-constitution of the Tribunal by the respondents.

2. Limited Statutory Relief: While granting the relief, the Court clarified that the statutory relief of stay, on depositing the required amount, should not be open-ended. The petitioner is obligated to file the appeal under Section 112 of the B.G.S.T. Act once the Tribunal is constituted and functional.

3. Appeal Filing Requirements: The Court specified that the appeal must adhere to statutory requirements and be filed after the Tribunal’s existence is established, ensuring a fair consideration of the appeal.

4. Liberty to Proceed: In case the petitioner chooses not to file an appeal within the specified period after the Tribunal’s constitution, the respondent authorities have the liberty to proceed further in accordance with the law.

5. Release of Attachments: If the prescribed conditions are met, including the payment of 20 percent of the disputed tax amount, any attachment of the petitioner’s bank account shall be released.

Conclusion: The Patna High Court’s judgment in Cohesive Infrastructure Developers Pvt. Ltd. vs. Central Board of Indirect Taxes and Customs reflects a balanced approach, safeguarding the petitioner’s rights despite the challenges posed by the non-constitution of the Appellate Tribunal. The decision underscores the importance of upholding statutory remedies and ensuring fair opportunities for appellants even in the absence of key adjudicatory bodies.

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 multifarious reliefs.

2. The petitioner essentially 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”).

3. 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 G.S.T. Act.

4. 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.

5. 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.

6. This Court is, therefore, inclined to dispose of the instant writ petition in the following terms:-

(i) Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner 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. It is not in dispute that similar relief has been granted by this Court in the case of SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others in W.J. C. No. 15465 of 2 022.

(ii) The statutory relief of stay, on deposit of the statutory amount, however 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 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.

(iii) 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.

(iv) If the above order is complied with and a sum equivalent to 20 per cent of the remaining amount of the tax in dispute is paid then, if there is any attachment of the bank account of the petitioner pursuant to the demand, the same shall be released.

7. With the above liberty, observation and directions, the writ petition stands disposed of.