Orissa HC Stayed demand of penalty & interest in absence of GSTAT

Prafulla Kumar Sahoo v. Commissioner of CT & GST Odisha (Orissa High Court)

The Hon’ble Orissa High Court in Prafulla Kumar Sahoo v. Commissioner of CT & GST Odisha, Banijyakar Bhavan & Ors. [W.P.(C) No. 15842 of 2023 & I.A. No. 7254 of 2023 dated May 17, 2023] had stayed the demand of penalty and interest raised by the Revenue Department, during the pendency of writ petition, subject to the condition that the assessee deposits the entire amount of tax demanded within a period of 15 days, since the assessee wanted to avail the remedy under the provisions of law by approaching GST Appellate Tribunal (“GSTAT”).

Facts:

This petition has been filed by Prafulla Kumar Sahoo (“the Petitioner”) challenging the Order dated April 12, 2023 (“the Impugned Order”) passed the by Joint Commissioner of State Tax (Appeal) (“the First Appellate Authority”) demanding the amount of penalty and interest, wherein, the appeal preferred by the Petitioner under Section 107(1) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) had been rejected.

The Petitioner contended that the Petitioner is not liable to pay the tax and penalty against the Impugned Order as the Petitioner had already deposited 10% of the demanded tax amount before the First Appellate Authority and there is no GSTAT constituted as on date.

Issue:

Whether the demand of interest and penalty is liable to be stayed in absence of the GSTAT?

Held:

The Hon’ble High Court in W.P.(C) No. 15842 of 2023 held as under:

• Issued notice to the Revenue Department.
• Noted that, in case the Petitioner wants to avail the remedy by preferring appeal before the GSTAT, the Petitioner would be liable to pay 20% of the disputed tax for consideration of its appeal.
• Observed that, the Petitioner wants to avail the remedy under the provisions of law by approaching GSTAT, which has not yet been constituted.
• Held that, the amount of penalty and interest demanded shall remain stayed during pendency of the petition, subject to the condition that the Petitioner deposits the entire amount of tax demanded within a period of 15 days.

Relevant provision:

Section 112(1) of the CGST Act:

“Appeals to Appellate Tribunal

112. (1) Any person aggrieved by an order passed against him under section 107 or section 108 of this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to the Appellate Tribunal against such order within three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal.” 

FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT

01. This matter is taken up through hybrid mode.

2. The present writ petition is being entertained only because the Second Appellate Tribunal has not yet been constituted.

3. The petitioner has filed this writ petition challenging the 1st appellate order dated 12.04.2023 passed by the Joint Commissioner of State Tax (Appeal), Territorial Range, Balasore, by which said authority has not admitted the appeal preferred by the petitioner, as the same is in contravention to sub-sections (1) & (4) of Section 107 of the GST Act and has rejected the appeal filed under sub-Section (1) of Section 107 of the Odisha Goods and Services Tax Act, 2017.

4. Learned counsel for the petitioner contended that the petitioner is not liable to pay the tax and penalty and, as such, against the order passed by the 1^st appellate authority though second appeal lies, the 2^nd appellate tribunal has not yet been constituted. It is contended that the petitioner has already deposited 10% of the demanded tax amount before the first appellate authority and as there is no second appellate forum, this Court should entertain this writ petition.

5. Mr. Sunil Mishra, learned Standing Counsel vehemently contended that since there is delay in preferring the appeal, this Court may not be in a position to condone the delay beyond four months, particularly when appellate authority has not been vested with discretion to condone the delay beyond one month after lapse of three months from the date of communication of order impugned therewith. It is further contended that this case stands in different footing and, as such, the petitioner is liable to pay the tax. In the event the petitioner wants to avail the remedy by preferring appeal before the 2^nd appellate tribunal then the petitioner is liable to pay 20% balance disputed tax for consideration of its appeal by the 2^nd appellate tribunal.

6. Issue notice to the opposite parties.

7. Since Mr. Sunil Mishra, learned Standing counsel for the Department accepts notice for the Opposite parties, let required number of copies of the writ petition be served on him within three working days. Reply be filed within two weeks and rejoinder thereto, if any, be filed before the next date.

8. Since the petitioner wants to avail the remedy under the provisions of law by approaching 2^nd appellate tribunal, which has not yet been constituted, the amount of penalty and interest demanded by authority shall remain stayed during pendency of the writ petition subject to the Petitioner depositing the entire amount of tax demanded within a period of fifteen days from today.

9. I. A. stands disposed of.

10. List this matter along with W.P.(C) No.6684 of 2023 on the date fixed therein.

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