2023 (4) TMI 644 - HC - GST

Supreme Judicial Review Allows Partial GST Tax Appeal with Conditional 20% Deposit and Temporary Demand Stay

SC reviewed a GST Act appeal challenging a first appellate order. Due to absence of a second appellate tribunal, the petitioner filed a writ petition. The ... Writ jurisdiction where alternative forum unavailable - Power to entertain writ petition when second appellate tribunal not constituted - Interim stay subject to deposit of disputed tax demand - Limitation on condonation of delay in preferring statutory appeal under the GST appellate regimeWrit jurisdiction where alternative forum unavailable - Power to entertain writ petition when second appellate tribunal not constituted - High Court entertained the writ petition because the Second Appellate Tribunal under the GST appellate mechanism had not yet been constituted. - HELD THAT: - The Court proceeded to entertain the writ petition on the ground that the statutory second appellate forum (the Second Appellate Tribunal) was not in existence, thereby rendering the alternate statutory remedy practically unavailable. The order records that the petition is being entertained only for that reason and the matter has been admitted for interim consideration. The petitioner's contention that a second appeal would otherwise lie but the tribunal is not constituted was accepted as the basis for jurisdictional entertainment of the petition. [Paras 2, 3]Writ petition entertained because the Second Appellate Tribunal has not been constituted; notice issued to opposite parties.Interim stay subject to deposit of disputed tax demand - Interim relief conditioned on deposit of entire tax demand - Interim protection of the remainder of the tax demand was granted subject to the petitioner depositing the entire tax demand within four weeks. - HELD THAT: - As an interim measure, and in view of the non-constitution of the second appellate forum, the Court directed that the petitioner may approach this Court while the tribunal remains unconstituted, but ordered that the petitioner must deposit the entire tax demand within four weeks. Upon such deposit, the balance of the demand was stayed during the pendency of the writ petition. This conditional stay balances the petitioner's access to judicial remedy with protection of revenue interests and was expressly directed by the Court. [Paras 8]Petitioner to deposit the entire tax demand within four weeks; upon such deposit the rest of the demand shall remain stayed during pendency of the writ petition.Limitation on condonation of delay in preferring statutory appeal under the GST appellate regime - Routine procedural directions were issued concerning service and time-limits for the Department's reply and any rejoinder by the petitioner. - HELD THAT: - The Court issued directions for service of the writ petition on the Opposite Parties within three working days, fixed two weeks for filing the Department's reply and permitted a rejoinder before the next date. The departmental counsel also raised the point that the first appellate authority's power to condone delay is limited under the GST appellate provisions, but the Court confined its order to procedural steps and interim relief without deciding condonation of delay on merits. [Paras 6, 7]Notice issued; petition copies to be served within three working days; reply in two weeks and rejoinder, if any, before the next date; issue of condonation of delay reserved.Final Conclusion: The High Court entertained the writ petition due to non-constitution of the Second Appellate Tribunal, issued notice and procedural directions, and granted an interim stay of the balance of the tax demand on condition that the petitioner deposits the entire tax demand within four weeks; other contested questions, including condonation of delay, remain open for adjudication. Issues involved: Challenge to 1st appellate order under GST Act, delay in preferring appeal, constitution of 2nd appellate tribunal.Summary:Challenge to 1st Appellate Order:The writ petition was entertained due to the absence of the Second Appellate Tribunal. The petitioner challenged the 1st appellate order which was not admitted as it was deemed to be in contravention of specific sections of the GST Act. The petitioner argued against liability for tax and penalty, having already deposited a portion of the demanded tax amount before the first appellate authority. As the 2nd appellate tribunal was not yet constituted, the petitioner sought relief through the writ petition.Delay in Preferring Appeal:The Standing Counsel contended that there was a delay in filing the appeal, and requested the court not to condone the delay beyond four months. The appellate authority was not empowered to extend the time limit beyond one month after three months from the date of the order. It was argued that the petitioner should pay the tax, and if opting to appeal to the 2nd appellate tribunal, a balance disputed tax of 20% must be paid for consideration.Constitution of 2nd Appellate Tribunal:The court issued notice to the opposite parties, with the Standing Counsel accepting notice on their behalf. The petitioner was allowed to approach the 2nd appellate tribunal, subject to depositing the entire tax demand within four weeks. The remaining demand was stayed during the pendency of the writ petition. An interim application was disposed of, and the matter was listed for further proceedings after two weeks.