2025 (2) TMI 170 - HC - GST

Petitioner granted stay on disputed tax recovery with 10% deposit under CGST Act, 2017; bank accounts to be released.

The HC ruled that the petitioner is entitled to a stay of recovery of the disputed tax amount upon depositing ten percent of the tax in dispute, ... Maintainability of petition - availability of alternative remedy of appeal - seeking stay of recovery of the disputed tax amount - non-constitution of the Tribunal - HELD THAT:- An amendment has been made to Section-112 of the Central Goods and Services Tax Act, 2017 substituting “twenty per cent” pre deposit to “ten per cent” for maintaining an appeal before the Goods and Services Tax Tribunal. The Tribunal has not yet been constituted and this Court had been granting orders based on the judgment in SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others [2023 (3) TMI 1390 - PATNA HIGH COURT], allowing the assessee to deposit twenty per cent of the disputed amount of tax, till the Tribunal is constituted and an appeal is filed also allowing stay of recovery. Subject to deposit of a sum equal to 10 percent of the 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. Petition disposed off. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment are:Whether the petitioner is entitled to a stay of recovery of the disputed tax amount due to the non-constitution of the Appellate Tribunal under the Bihar Goods and Services Tax Act (B.G.S.T. Act).The appropriate percentage of pre-deposit required for maintaining an appeal before the Tribunal, given the recent amendments to the Central Goods and Services Tax Act, 2017.The implications of the non-constitution of the Tribunal on the petitioner's ability to file an appeal and seek relief.The conditions under which the petitioner can be granted a stay of recovery pending the constitution of the Tribunal.ISSUE-WISE DETAILED ANALYSISIssue 1: Entitlement to Stay of Recovery Due to Non-Constitution of TribunalThe petitioner sought relief under Article 226 of the Constitution of India, arguing that the non-constitution of the Tribunal deprived them of the statutory remedy of appeal under Section 112 of the B.G.S.T. Act. The Court recognized the petitioner's predicament and acknowledged that the absence of the Tribunal effectively barred the petitioner from exercising their right to appeal and obtain a stay of recovery.Relevant Legal Framework and Precedents: The Court referred to the statutory provisions under the B.G.S.T. Act, specifically Section 112, which outlines the procedure for appeals and the conditions for stay of recovery. The precedent set in the case of SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others was considered, where similar relief was granted due to the non-constitution of the Tribunal.Court's Interpretation and Reasoning: The Court interpreted that the petitioner should not be disadvantaged due to the administrative delay in constituting the Tribunal. It reasoned that the statutory rights to appeal and seek a stay of recovery should be preserved, even in the absence of the Tribunal.Application of Law to Facts: The Court applied the legal principles to the facts by determining that the petitioner should be allowed a stay of recovery upon fulfilling certain conditions, given the lack of a functional Tribunal.Issue 2: Appropriate Percentage of Pre-DepositThe amendment to the Central Goods and Services Tax Act, 2017, reducing the pre-deposit requirement from twenty percent to ten percent, was a significant factor in this case. The Court needed to decide whether this amendment should apply to the petitioner's situation.Relevant Legal Framework and Precedents: The amendment to Section 112 of the Central Goods and Services Tax Act, 2017, was central to this issue. The Court considered the effective date of the amendment and its applicability to pending cases.Court's Interpretation and Reasoning: The Court interpreted that the reduced pre-deposit requirement should apply to the petitioner, aligning with the legislative intent to ease the financial burden on appellants.Application of Law to Facts: The Court directed that the petitioner could avail the stay of recovery by depositing ten percent of the disputed tax amount, reflecting the amended legal requirement.SIGNIFICANT HOLDINGSThe petitioner is entitled to a stay of recovery of the disputed tax amount upon depositing ten percent of the tax in dispute, in line with the recent amendment to the Central Goods and Services Tax Act, 2017.The Court held that the petitioner cannot be deprived of their statutory rights due to the non-constitution of the Tribunal, and any recovery actions should be stayed accordingly.The Court emphasized that the stay of recovery is not open-ended and is contingent upon the petitioner filing an appeal once the Tribunal is constituted and operational.The Court established that if the petitioner fails to file an appeal within the specified period after the Tribunal's constitution, the respondent authorities are at liberty to proceed with recovery actions.The Court ordered that any attachment of the petitioner's bank accounts should be released upon compliance with the deposit condition.Core Principles Established: The judgment reinforces the principle that statutory rights should not be hindered by administrative delays. It also underscores the importance of aligning judicial relief with legislative amendments to ensure fairness and equity.Final Determinations on Each Issue: The Court concluded by disposing of the writ petition, granting the petitioner conditional relief pending the constitution of the Tribunal, and setting clear guidelines for both parties to follow in the interim period.