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2025 (2) TMI 132 - HC - GSTRecovery of outstanding dues - applicability and interpretation of Circular No. 224/18/2024-GST issued by the Ministry of Finance concerning the recovery of outstanding dues when the first appeal has been disposed of and the Appellate Tribunal is not yet operational - Revenue submits that the writ petition may be heard on the usual terms provided under Section 112(8) of CGST Act - HELD THAT - Having considered the materials on record as also taking note of the fact that the Appellate Tribunal is yet to be constituted it is opined that the petition should be heard. Since the petitioner has been able to make out a prima facie case there shall be an unconditional stay of the demand of the Appellate order dated 10th September 2024 for a period of two weeks from date. In the event the petitioner makes payment of 10% of the balance amount of tax in dispute in addition to the amount already deposited in terms of Section 107(6) of the said Act within two weeks from date the interim order passed herein shall continue till the disposal of the writ petition or until further order whichever is earlier - Let affidavit-in-opposition to the present writ petition be filed within a period of six weeks from date reply if any be filed within one week thereafter.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Stay of the Appellate Order The petitioner challenged the appellate order dated 10th September 2024. The primary legal framework governing this issue is the Central Goods and Services Tax (CGST) Act, particularly Section 112, which outlines the process for appeals and the conditions for staying recovery proceedings. The Court considered the fact that the Appellate Tribunal had not yet been constituted, which is a significant factor in determining whether the stay should be granted. The Court noted that the petitioner had established a prima facie case for the stay, which justified the temporary suspension of the appellate order. The Court granted an unconditional stay of the demand from the appellate order for two weeks, with the condition that the petitioner pays 10% of the disputed tax amount in addition to what has already been deposited under Section 107(6) of the CGST Act. This condition ensures that the petitioner shows a commitment to resolving the tax dispute while the stay is in effect. 2. Interpretation of Circular No. 224/18/2024-GST The Circular issued by the Ministry of Finance provides guidelines for taxpayers who wish to appeal an appellate authority's order and seek a stay on the recovery of the remaining confirmed demand. The Circular clarifies the process for making a pre-deposit and the requirements for obtaining a stay under Section 112 of the CGST Act. The Court interpreted the Circular as allowing taxpayers to make a pre-deposit payment through the Electronic Liability Register and to file an undertaking with the jurisdictional officer to file an appeal when the Appellate Tribunal becomes operational. This interpretation aligns with the Circular's intent to facilitate taxpayers in managing their liabilities during the interim period before the Tribunal's establishment. The Court concluded that the Circular provides a clear mechanism for taxpayers to secure a stay on recovery proceedings by fulfilling the specified conditions, such as making the pre-deposit and filing the necessary undertaking. 3. Conditions for Stay of Recovery Proceedings The legal framework under Section 112 of the CGST Act, as supported by the Circular, outlines the conditions under which a taxpayer can obtain a stay on recovery proceedings. The taxpayer must make a pre-deposit and file an undertaking to appeal the order once the Tribunal is operational. The Court emphasized that failure to comply with these conditions would result in the presumption that the taxpayer is not willing to appeal, thereby allowing recovery proceedings to commence. This interpretation underscores the importance of taxpayer compliance with procedural requirements to benefit from the stay provisions. SIGNIFICANT HOLDINGS The Court held that an unconditional stay of the appellate order is warranted given the absence of the Appellate Tribunal and the prima facie case established by the petitioner. The stay is contingent upon the petitioner making a 10% payment of the disputed tax amount within two weeks. The Court's interpretation of Circular No. 224/18/2024-GST confirms that taxpayers have a clear pathway to secure a stay on recovery proceedings by fulfilling the conditions outlined in the Circular and Section 112 of the CGST Act. The Court's decision reinforces the principle that procedural compliance is crucial for taxpayers seeking relief under the GST framework, particularly in the context of pending Tribunal operations. The final determination on the issues is that the petitioner is granted a temporary stay, with the continuation of the stay contingent upon compliance with the payment condition. The Court also set timelines for filing affidavits, indicating that the matter will proceed with further submissions from both parties.
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