Patna HC: Fail to Set Up Appeals Court, Not Fair to Deny the Petitioner Their GST Benefit

The Patna High Court in its ruling has given relief to M/s Cohesive Infrastructure Developers Pvt. Ltd, the petitioner, in an issue of Goods and Services Tax (GST).

The division bench including Chief Justice K. Vinod Chandran and Justice Rajiv Roy permitted the writ petition filed under Article 226 of the Constitution of India, aiming various reliefs.

The petitioner wants to claim the legal remedy of appeal against the impugned order to 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”).

Due to the non-constitution of the Tribunal, the applicant was restrained from his legal remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act.

Under the cases, the applicant was also contained from claiming the advantage of stay of recovery of the balance amount of tax relevant to Section 112 (8) and (9) of the B.G.S.T Act on amounts deposited as contemplated under Sub-section (8) of Section 112.

The GST council of the respondent state has considered the fact of non-constitution of the Tribunal and released the notification stating the Order No. 09/2019-State Tax, S. O. 399, on 11.12.2019 for the elimination of the issues in practice of the powers under Section 172 of the B.G.S.T Act, that furnishes that limitation of time for the objective of preferring a petition to the Tribunal under Section 112 will get initiated merely after the date on which the President, or the State President, as per the matter might be, of the Tribunal after its constitution u/s 109 of the B.G.S.T Act, enters office.

The applicant does not get restrained from the advantage because of the non-constitution of the Tribunal by the respondents, ordered, the court observed.

“(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 the 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 C.W.J.C. No. 15465 of 2022.”

Important: GSTAT: Definition, Members, Reason of Delay Domino Effect

The Court further ordered, “(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 the 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.”

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As per the court does the applicant decides not to seek filing a petition option under Section 112 of the B.G.S.T. Act with the Tribunal within the stated duration, complying with the law the respondent authorities can proceed with the additional actions.

When the applicant follows the above order by making the payment equal to 20% of the liability disputed tax amount then any bank account attachment consequencing from the demand will be raised, the court stipulated.

Patna High Court has disposed of the writ petition through such observations and directions.