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2025 (2) TMI 361 - HC - GSTStay on impugned appellate order pending the constitution of the Appellate Tribunal - reliance placed on Circular No.224/18/2024-GST dated 11th July 2024 - recovery of outstanding dues in cases wherein first appeal has been disposed of till Appellate Tribunal comes into operation - HELD THAT - Having considered the materials on record as also taking note of the fact that the Appellate Tribunal is yet to be constituted the petition should be heard. Since the petitioners have been able to make out a prima facie case there shall be an unconditional stay of the demand of the Appellate order dated 31st May 2024 for a period of two weeks from date. In the event the petitioners make 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.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Stay of the Impugned Appellate Order The relevant legal framework involves the provisions of the CGST Act, particularly Section 112, which deals with appeals to the Appellate Tribunal. The Court considered the fact that the Appellate Tribunal had not yet been constituted, which impacted the taxpayer's ability to appeal the appellate authority's decision. The Court's interpretation was influenced by the guidelines provided in Circular No.224/18/2024-GST, which outlines the process for pre-deposit and stay of recovery. The Court noted the necessity for a mechanism to protect taxpayers from recovery proceedings when the appellate tribunal is not operational. Key evidence and findings included the acknowledgment of the circular's guidelines, which allow taxpayers to make a pre-deposit and file an undertaking to stay recovery proceedings. The Court applied these guidelines to the facts, noting the petitioners' prima facie case and the need for interim relief. The Court concluded that an unconditional stay of the demand was warranted for two weeks, with the possibility of extension if the petitioners complied with the requirement to pay 10% of the disputed tax amount. 2. Interpretation of Circular No.224/18/2024-GST The circular provides a framework for taxpayers to manage their liabilities while awaiting the establishment of the Appellate Tribunal. It clarifies the process for making pre-deposits and obtaining a stay on recovery. The Court reasoned that the circular's provisions must be adhered to, allowing taxpayers to navigate the electronic system for making pre-deposits and ensuring compliance with the necessary undertakings. Competing arguments included the State's position that the writ petition should proceed under the usual terms of Section 112(8). However, the Court found that the circular provided a clear directive that supported the petitioners' request for a stay. The conclusion was that the circular's guidelines should be followed, and the petitioners were granted a stay of the appellate order's demand, contingent upon compliance with pre-deposit requirements. SIGNIFICANT HOLDINGS The Court held that the petitioners demonstrated a prima facie case for a stay of the appellate order's demand. A crucial aspect of the legal reasoning was the recognition of the circular's role in providing interim relief mechanisms in the absence of an operational Appellate Tribunal. Core principles established include the necessity for interim relief when procedural mechanisms (like the Appellate Tribunal) are not in place, ensuring taxpayers are not unfairly burdened by recovery proceedings. The final determination was that the demand of the appellate order dated 31st May, 2024, would be stayed unconditionally for two weeks. This stay could be extended if the petitioners paid 10% of the disputed tax amount within the specified timeframe, thereby aligning with the circular's requirements.
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