2025 (8) TMI 990 - HC - GST

Petitioner must comply with CBIC Circular No.224/18/2024-GST and file undertaking to meet Section 112(8) pre-deposit within 15 days

M/s Archita Soap And Chemical LLP Versus Joint Commissioner (Appeals) State Tax, Durg, Chhattisgarh, Assistant Commissioner State Tax (GST), Circle-1, Durg, Chhattisgarh.

HC dismissed the writ petition as there are existing CBIC guidelines governing recovery of outstanding dues in matters where the first appeal has been ... Stay of recovery / pre-deposit - Rejection of application filed by the Petitioner u/s 161 of Chhattisgarh Goods & Services Tax Act, 2017 - CBIC Circular regarding 'Guidelines for recovery of outstanding dues, in cases wherein first appeal has been disposed of, till Appellate Tribunal comes into operation'- HELD THAT:- Considering that there are explicit guidelines for recovery of outstanding dues in cases wherein, first appeal has been disposed of till the Appellate Tribunal comes into operation, this Courts is of the considered opinion that nothing remains for adjudication in this Writ Petition. Accordingly, liberty is reserved in favour of the Petitioner to comply with the necessary conditions of circular No. 224/18/2024-GST of the Central Board of Indirect Taxes and Customs dated 11.07.2024 by filing an undertaking/declaration with the jurisdictional proper officer that she would file an Appeal against the order under challenge before the Appellate Tribunal as and when it comes into operation within the time lines mentioned in Section 112 of the CGST Act and shall also pay pre-deposit as per sub-section (8) of Section 112 of CGST Act within a period of 15 days from the date of receipt of copy of this order. Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether a writ petition challenging an order under Section 107(11) of the Chhattisgarh Goods & Services Tax Act, 2017 and the rejection of an application under Section 161 of the said Act remains maintainable when Central Board of Indirect Taxes and Customs (CBIC) has issued guidelines (Circular No. 224/18/2024-GST dated 11.07.2024) permitting an alternative mechanism of payment and stay of recovery pending constitution of the Appellate Tribunal? 2. Whether a taxpayer who elects to follow the CBIC circular by (a) making payment equivalent to the prescribed pre-deposit through Electronic Liability Ledger (ELL) Part-II and (b) filing an undertaking/declaration to file appeal before the Appellate Tribunal when constituted, is entitled to stay of recovery of the remaining confirmed demand under sub-section (9) of Section 112 of the CGST Act? 3. Whether the High Court should afford the petitioner liberty to comply with the CBIC circular and stay recovery by depositing the amount equivalent to pre-deposit and filing the required undertaking within a specified time, rather than adjudicating the writ on merits? 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability and subsistence of challenge in light of CBIC guidelines Legal framework: 1. Provisions involved: Section 112 (pre-deposit and stay consequences) of the Central Goods & Services Tax Act (as applied by State Act provisions), Section 107(11) and Section 161 of the State GST Act (procedural orders and review/rectification), and executive guidance issued by CBIC in the form of a circular addressing recovery and pre-deposit mechanics pending constitution of the Appellate Tribunal. Precedent treatment: 2. No judicial precedents were expressly relied upon in the judgment; the Court treated the CBIC circular as an operative administrative guideline addressing an identified procedural lacuna due to non-constitution of the Tribunal. Interpretation and reasoning: 3. The Court construed the CBIC circular as providing an alternative, administratively facilitated route for taxpayers to meet the substantive pre-deposit requirement (as envisaged by Section 112 of the CGST Act) despite the Tribunal not being in operation, and to obtain statutory stay of recovery under sub-section (9) by filing an undertaking. Given the existence of these explicit guidelines, the Court concluded there was no material dispute requiring adjudication by writ proceedings. Ratio vs. Obiter: 4. Ratio: Where there are explicit central administrative guidelines that afford a taxpayer a clear procedural remedy to secure stay and to meet pre-deposit requirements in the absence of the Appellate Tribunal, a writ petition challenging related recovery orders may be rendered unnecessary and may be disposed of by granting liberty to follow those guidelines. Conclusions: 5. The Court held that the existence of the CBIC circular removes matters from substantive adjudication in the writ and that nothing further required judicial determination in the petition insofar as reliefs replicable by compliance with the circular are concerned. Issue 2 - Entitlement to stay of recovery on compliance with circular (deposit via ELL and undertaking) Legal framework: 1. Sub-section (8) and (9) of Section 112 of the CGST Act prescribe (a) pre-deposit as a condition for filing appeals and (b) stay of recovery of the remaining confirmed demand where the pre-deposit requirement is satisfied; administrative circular sets out mechanism for taxpayers to deposit an amount equal to pre-deposit via the Electronic Liability Ledger Part-II and to file an undertaking/declaration to file appeal before the Tribunal when constituted. Precedent treatment: 2. The Court did not distinguish or overrule authority; it applied statutory contours of Section 112 together with the CBIC circular as clarificatory guidance consistent with statutory purpose. Interpretation and reasoning: 3. The Court interpreted the circular as operative to permit mapping of payments made through an alternative ELL route to the pre-deposit requirement and to treat the filing of the undertaking/declaration as the functional equivalent necessary to attract stay under sub-section (9). The Court noted the circular's explicit procedural steps (Services?Ledgers?Payment towards demand; selection of order in ELL Part-II; mapping of payment) and the condition that an undertaking to file appeal before the Tribunal must be furnished to the jurisdictional proper officer within the timelines set out in Section 112 (read with Ninth Removal of Difficulties Order, 2019). Ratio vs. Obiter: 4. Ratio: Compliance with the CBIC circular's twofold requirement - payment of an amount equal to statutory pre-deposit through the ELL mechanism and filing of the requisite undertaking to file appeal before the Appellate Tribunal - entitles the taxpayer to stay of recovery of the remaining demand under sub-section (9) of Section 112, until the Tribunal comes into operation and within the statutory timelines. Conclusions: 5. The Court concluded that the petitioner is entitled to avail the stay contemplated by sub-section (9) of Section 112 by complying with the circular's conditions and that such compliance would preclude immediate recovery of the balance demand. Issue 3 - Appropriate judicial relief: grant of liberty to comply with circular and time-limited direction Legal framework: 1. Writ jurisdiction permits issuance of directions or liberty where administrative remedies are effective; principles of judicial restraint support permitting statutory or administrative schemes to operate when they adequately address the grievance. Precedent treatment: 2. The Court did not cite precedents but acted in accordance with the principle of declining to grant substantive relief where an alternative statutory/administrative remedy is available and efficacious. Interpretation and reasoning: 3. The Court reasoned that, since the circular provides a clear, prospective remedial route, the appropriate judicial course is to reserve liberty to the petitioner to comply with the circular and to prescribe a firm but limited period for deposit and filing of undertaking (15 days), failing which the order will lapse. The Court observed that the State did not oppose the prayer, reinforcing that administrative compliance is an effective remedy. Ratio vs. Obiter: 4. Ratio: Where central administrative guidelines supply a complete and operational remedy for staying recovery pending constitution of an appellate forum, the High Court may dispose of a writ petition by granting time-limited liberty to avail that remedy rather than adjudicating the merits. Conclusions: 5. The Court disposed of the writ by reserving liberty to comply with the CBIC circular (payment by ELL and undertaking to file appeal) within 15 days; it directed that upon such compliance, recovery shall remain stayed as per sub-section (9) of Section 112. The Court made clear that failure to deposit within the stipulated period will render the order ineffective. Cross-References and Practical Effect 1. The decision emphasizes interplay between statutory pre-deposit requirements under Section 112 and executive circulars providing procedural mechanisms in exceptional circumstances (non-constitution of Tribunal); see Issue 1 & Issue 2 analyses. 2. The Court's disposition is procedural and declaratory: it does not adjudicate substantive correctness of the underlying demand/order but facilitates statutory compliance and stay through administrative mechanism - this is the operative ratio; any future adjudication on the merits remains preserved for the appellate forum when constituted.