2023 (11) TMI 1343 - HC - GST

Tax Appeal Vindicated: Petitioner Wins Right to Challenge Assessment with 20% Deposit Amid Tribunal Delay

Abhay Enterprises Versus State of Bihar through Commissioner of State Tax Patna, Addl. Commissioner of State Tax Muzaffarpur, Asst. Commissioner of State Tax Bihar

HC resolved key tax appeal issues arising from non-constitution of Appellate Tribunal. The court granted the petitioner right to file appeal and stay on ... Maintainability of petition - availability of alternative remedy - entitlement to 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 - HELD THAT:- 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. 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. Petiiton disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the High Court in this judgment are:Whether the petitioner is entitled to avail the statutory remedy of appeal under Section 112 of the Bihar Goods and Services Tax Act (B.G.S.T. Act) despite the non-constitution of the Appellate TribunalRs.Whether the petitioner can be granted a stay on the recovery of the disputed tax amount under Section 112 (8) and (9) of the B.G.S.T. Act due to the non-constitution of the TribunalRs.What are the conditions under which the petitioner can be granted relief, and what are the implications if the petitioner does not pursue the appeal once the Tribunal is constitutedRs.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Entitlement to Statutory Remedy of AppealRelevant Legal Framework and Precedents: The petitioner seeks to appeal under Section 112 of the B.G.S.T. Act. However, the Tribunal, which is required for such an appeal, has not been constituted.Court's Interpretation and Reasoning: The court acknowledges the petitioner's right to appeal, which is hindered by the non-constitution of the Tribunal. The court refers to a notification that delays the start of the limitation period for filing an appeal until the Tribunal is constituted.Key Evidence and Findings: The State authorities have issued a notification acknowledging the non-constitution of the Tribunal and its implications.Application of Law to Facts: The court applies the notification to conclude that the petitioner cannot be deprived of the right to appeal due to the State's failure to constitute the Tribunal.Treatment of Competing Arguments: The court does not explicitly address competing arguments but bases its decision on the acknowledged facts and the notification.Conclusions: The petitioner is entitled to file an appeal once the Tribunal is constituted, and the limitation period will begin only after the Tribunal is functional.Issue 2: Stay on Recovery of Disputed Tax AmountRelevant Legal Framework and Precedents: Section 112 (8) and (9) of the B.G.S.T. Act provides for a stay on recovery of the disputed tax amount upon certain conditions.Court's Interpretation and Reasoning: The court reasons that the petitioner should not be deprived of the stay benefit due to the State's failure to constitute the Tribunal.Key Evidence and Findings: The court notes that similar relief has been granted in previous cases, such as SAJ Food Products Pvt. Ltd. vs. The State of Bihar.Application of Law to Facts: The court applies the law to grant a stay on recovery, subject to the petitioner depositing 20% of the disputed tax amount.Treatment of Competing Arguments: The court balances the equities by ensuring the stay is not open-ended and is conditional upon future actions by the petitioner.Conclusions: The petitioner is granted a stay on recovery, conditional on depositing 20% of the disputed amount and filing an appeal once the Tribunal is constituted.Issue 3: Conditions and Implications of ReliefRelevant Legal Framework and Precedents: The court considers the implications of the petitioner not filing an appeal once the Tribunal is constituted.Court's Interpretation and Reasoning: The court imposes a condition that the petitioner must file an appeal once the Tribunal is constituted to maintain the stay.Key Evidence and Findings: The court's decision is based on the principle of balancing equities and ensuring procedural compliance.Application of Law to Facts: The court applies the law to ensure that the petitioner is not unduly advantaged by the State's delay in constituting the Tribunal.Treatment of Competing Arguments: The court does not explicitly address competing arguments but focuses on procedural fairness and compliance.Conclusions: The petitioner must file an appeal within a specified period once the Tribunal is constituted, or the State may proceed with recovery actions.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'The petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves.'Core Principles Established: The court establishes that procedural delays by the State should not prejudice the rights of individuals to statutory remedies.Final Determinations on Each Issue: The court determines that the petitioner is entitled to a stay on recovery and must be allowed to file an appeal once the Tribunal is constituted, with specific conditions to ensure compliance.