2024 (5) TMI 1549 - HC - GST

Taxpayers Win Temporary Relief from Tax Recovery Due to Pending GST Appellate Tribunal Establishment under Section 112

M/s Divya Steels; M/s Ganpati Developers; M/s Baba Hardasram Agency A Proprietorship; M/s Divya Steels Having; M/s Shree Balaji Enterprises Through Its Proprietor Ayush Agrawal; M/s Pushpak Electronics; Sarda Energy And Minerals Limited Through Signatory of The Petitioner Company In The Instant Petition, Ayodhya Prasad Shukla; M/s. Shree Balaji Enterprises Through Its Proprietor Ayush Agrawal Versus State of Chhattisgarh And Ors.

M/s Divya Steels; M/s Ganpati Developers; M/s Baba Hardasram Agency A Proprietorship; M/s Divya Steels Having; M/s Shree Balaji Enterprises Through Its ... ISSUES PRESENTED and CONSIDEREDThe primary legal issue considered in this judgment is whether the petitioners can be granted relief in the form of a stay on the recovery of tax, interest, and penalty assessed by the Assistant Commissioner State Tax, pending the constitution of the Goods and Service Tax Appellate Tribunal. The Court also considered the procedural requirements for filing an appeal before the Tribunal once it becomes operational, including the deposit of 20% of the disputed tax amount.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe case revolves around the provisions of the Chhattisgarh Goods and Service Tax Act, 2017, specifically Section 107(1) concerning the first appeal, and Section 112(8) regarding the requirement to deposit 20% of the disputed tax amount for filing an appeal before the Appellate Tribunal. The Court also considered precedents set by the Patna High Court and the Bombay High Court, which addressed similar issues concerning the non-constitution of the GST Appellate Tribunal.Court's Interpretation and ReasoningThe Court recognized the procedural gap caused by the non-constitution of the GST Appellate Tribunal, which prevents taxpayers from pursuing their statutory right to appeal. The Court acknowledged that the petitioners had already deposited the required 20% of the disputed tax amount, fulfilling the condition for filing an appeal under Section 112(8) of the Act. The Court emphasized the importance of maintaining the statutory stay on recovery actions to prevent undue hardship to the taxpayers due to the administrative delay in constituting the Tribunal.Key Evidence and FindingsThe Court noted that the petitioners had complied with the requirement to deposit 20% of the disputed tax amount, as confirmed by the respondents. Additionally, the Court took judicial notice of the notifications extending the limitation period for filing appeals until the Tribunal becomes operational.Application of Law to FactsThe Court applied the legal principles established in the precedents from the Patna and Bombay High Courts, which provided for a stay on recovery actions pending the constitution of the Tribunal. The Court determined that the statutory stay under Section 112(9) of the Act should remain in effect until the appeals are decided by the Tribunal once it is constituted.Treatment of Competing ArgumentsThe respondents did not dispute the petitioners' compliance with the deposit requirement or the applicability of the precedents from other High Courts. The Court balanced the equities by ensuring that the petitioners are not deprived of their right to appeal due to the administrative delay while also safeguarding the revenue's interest by requiring the deposit of 20% of the disputed amount.ConclusionsThe Court concluded that the petitioners are entitled to the statutory stay on recovery actions pending the constitution of the GST Appellate Tribunal. The petitioners are directed to file their appeals before the Tribunal once it becomes operational, observing all statutory requirements.SIGNIFICANT HOLDINGSThe Court held that 'the statutory stay as provided under Section 112(9) of Act of 2017 would remain in operation till the decision of such appeals.' This holding preserves the petitioners' right to appeal and prevents the recovery of assessed amounts until the Tribunal is constituted and the appeals are decided on their merits.The Court established the principle that administrative delays in constituting the Tribunal should not prejudice the taxpayers' right to appeal, provided they comply with the statutory deposit requirements.The final determination on the issue is that the writ petitions are disposed of with directions for the petitioners to file their appeals once the Tribunal is operational, with the statutory stay remaining in effect until the appeals are adjudicated.