2023 (3) TMI 879 - HC - GST

Taxpayer Must Deposit 20% of Disputed Tax to Obtain Stay Pending Tribunal Constitution and Appeal Filing

Angel Engicon Private Limited Versus State of Bihar, Assistant Commissioner of State Tax

HC of Patna addressed a tax appeal case where the petitioner challenged an assessment order due to non-constitution of the Tribunal. The court directed ... Maintainability of petition - availability of alternative remedy of appeal - non-constitution of Tribunal - recovery proceedings for the balance amount - HELD THAT:- It appears that conscious of the fact of non constitution of the Tribunal, a notification dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T. Act has been issued by the State of Bihar - the notification dated 11.12.2019 provides that the period of limitation, for the purpose of preferring an appeal under Section 112 of the B.G.S.T. Act, 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. It is thus apparent that petitioner's statutory right to prefer an appeal survives. Considering the facts and circumstances above, including the admitted position regarding non-constitution of the Tribunal under Section 109 of the B.G.S.T. Act, this Court is of the opinion that keeping the writ petition pending would serve no useful purpose - 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. Application disposed off. Issues:1. Rejection of appeal against the order of assessment by the Additional Commissioner of State Tax.2. Statutory remedy of appeal under Section 112 of the Bihar Goods and Services Tax Act (B.G.S.T. Act).3. Non-constitution of the Tribunal affecting the petitioner's ability to avail statutory remedy.4. Notification clarifying the period of limitation for preferring an appeal.5. Petitioner's desire to avail the statutory remedy of appeal and stay of recovery of the balance tax amount.6. Court's decision on the petitioner's deposit and extension of statutory benefit of stay.7. Requirement for the petitioner to file an appeal once the Tribunal is constituted.8. Consequences of not availing the remedy of appeal within the specified period.Analysis:The High Court of Patna addressed the writ petition where the petitioner challenged the rejection of their appeal against the assessment order by the Additional Commissioner of State Tax. The petitioner had a statutory remedy of appeal under Section 112 of the B.G.S.T. Act. However, due to the non-constitution of the Tribunal, the petitioner was unable to exercise this statutory right, which was essential for the stay of recovery proceedings for the balance tax amount as per the Act.Recognizing the issue of non-constitution of the Tribunal, the State of Bihar had issued a notification clarifying the period of limitation for filing an appeal under Section 112. The notification specified that the limitation period would commence after the President or State President of the Tribunal enters office post-constitution under Section 109 of the B.G.S.T. Act. This clarification ensured that the petitioner's right to prefer an appeal remained intact.The Court acknowledged the petitioner's desire to avail the statutory remedy of appeal and the benefit of stay on the recovery of the balance tax amount. To address the situation arising from the non-constitution of the Tribunal, the Court directed the petitioner to make a deposit equivalent to 20 percent of the remaining tax amount in dispute. By doing so, the petitioner would be entitled to the statutory benefit of stay as per the Act, preventing deprivation of this benefit due to the Tribunal's non-constitution.In balancing the equities, the Court emphasized that the relief of stay on deposit should not be indefinite. Therefore, the petitioner was required to file an appeal under Section 112 once the Tribunal is constituted and functional, and the President or State President assumes office. Failure to file the appeal within the specified period upon the Tribunal's constitution would empower the respondent Authorities to proceed further in accordance with the law.With these considerations, the Court disposed of the writ application, granting the petitioner the necessary relief while setting clear guidelines for future actions concerning the appeal process and recovery proceedings.