2024 (5) TMI 1549 - HC - GST

Entitlement for grant of 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 - HELD THAT - These writ petitions are disposed of with a direction that as soon as the president or state president enters office of the Goods and Service Tax Appellate Tribunal constituted under the Act of 2017 the petitioner would file an appeal that may be decided in accordance with law on its own merits. The statutory stay as provided under Section 112(9) of Act of 2017 would remain in operation till the decision of such appeals. If the appeal is not filed within the prescribed period of limitation the state would be at liberty to proceed against the petitioners for recovery of remaining taxes interest and penalty if any. Petition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The 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 ANALYSIS

Relevant Legal Framework and Precedents

The 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 Reasoning

The 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 Findings

The 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 Facts

The 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 Arguments

The 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.

Conclusions

The 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 HOLDINGS

The 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.