M/S Netway Solution vs. The Union Of INDIA

CWJC/17396/2023HC PatnaGSTCNR BRHC01117472202312 March 2024Bench: MR. JUSTICE HARISH KUMAR,THE CHIEF JUSTICE-4 pages

AI SummaryPartly Allowed

Facts

M/s Netway Solution, a sole proprietorship, filed a writ petition seeking to avail the statutory remedy of appeal against an order before the Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax (B.G.S.T.) Act. However, the petitioner was unable to file the appeal due to the non-constitution of the Tribunal. This also prevented the petitioner from availing the benefit of stay of recovery of the balance tax amount under Section 112(8) and (9) of the B.G.S.T. Act upon depositing the stipulated amounts. The respondent State authorities acknowledged the non-constitution of the Tribunal and issued a notification under Section 172 of the B.G.S.T. Act, stating that the period of limitation for filing an appeal would commence only after the President of the Tribunal entered office.

Held

The Court held that the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act, subject to the deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, in addition to any amount already deposited under Section 107(6). The Court reasoned that the petitioner cannot be deprived of this benefit due to the non-constitution of the Tribunal by the respondents. Consequently, the recovery of the balance amount and any related steps would be stayed. The Court also held that this statutory relief of stay cannot be open-ended. To balance equities, the petitioner would be required to file their appeal under Section 112 of the B.G.S.T. Act once the Tribunal is constituted and functional. If the petitioner fails to file the appeal within the period specified upon the Tribunal's constitution, the respondent authorities would be at liberty to proceed. The Court also directed that if the order is complied with and the 20 percent of the remaining tax is paid, any attachment of the petitioner's bank account pursuant to the demand shall be released. The ratio is that statutory remedies should not be rendered nugatory due to administrative inaction, and courts can grant interim relief to preserve the efficacy of such remedies.

Key Issues

1. Whether the petitioner is entitled to the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act, despite the non-constitution of the Appellate Tribunal, upon depositing 20 percent of the remaining tax in dispute, in addition to amounts already deposited under Section 107(6)? The petitioner argued that they should not be deprived of this benefit due to the respondents' failure to constitute the Tribunal. The revenue/state did not record any specific argument against this point, but implicitly relied on the existing statutory framework. 2. Whether the stay of recovery of the balance amount should be open-ended, or if there should be a condition for filing the appeal once the Tribunal is constituted? The petitioner sought a stay of recovery. The court considered the need to balance equities and ensure the appeal is eventually filed.

Sections Cited

Section 112, Section 172, Section 109, Section 107

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.17396 of 2023 ====================================================== M/s Netway Solution (a Sole Proprietor ship Firm), having it registered office at 1st N/A, Diwakar House, Boring Road, A.N College, S.K Puri, Patna Bihar through its Sole Proprietor Mr. Vijay Anand, aged about 41 Year S/o Pashupati Nath Mishra. ... ... Petitioner/s Versus 1. The Union of India through the Secretary, Ministry of Finance, Department of Revenue, having its office at Room No. 46, North Block, P.O. and P.S. North Block, New Delhi-110001. Delhi- 110001. 2. The Chief Commissioner, CGST and CX, Office at C.R Building, 1st Floor, Bir Chand Patel Path, Patna, Bihar. 3. The State of Bihar through Commissioner BGST, New Secretariat, Patna. 4. Joint Commissioner of State Tax, Patna West Circle, Patna, Bihar. 5. Assistant Commissioner of State Tax, Patna West Circle, Patna, Bihar. 6. Additional Commissioner (Appeal), Patna, West Division, Patna. ... ... Respondent/s ====================================================== Appearance : For the Petitioner/s : Mr. Anurag Saurav, Advocate For the Respondent/s : Dr. K. N. Singh, Additional Solicitor General Mr. Anshuman Singh, Advocate For the State : Mr. Vivek Prasad, GP-7 ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE HARISH KUMAR

ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 12-03-2024 The instant writ petition has been filed under Article 226 of the Constitution of India seeking multifarious reliefs.

The petitioner essentially is desirous of availing statutory remedy of appeal against the impugned order before the Appellate Tribunal (hereinafter referred to as 2/4 "Tribunal") under Section 112 of the Bihar Goods and Services Tax Act (hereinafter referred to as "B.G.S.T. Act").

However, due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act.

Under the circumstances, the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. 5. The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office.

This Court is, therefore, inclined to dispose of 3/4 the instant writ petition in the following terms:- (i) Subject to deposit of a sum equal to 20 percent of the remaining 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 State of Bihar & Others in C.W.J.C. No. 15465 of 2022. (ii) The statutory relief of stay, on deposit of the statutory amount, however in the opinion of this Court, cannot be open ended. For balancing the equities, therefore, the Court is of the opinion that since order is being passed due to non- constitution of the Tribunal by the respondent- Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. The appeal would be required to be filed observing the statutory requirements after coming into existence of the Tribunal, for facilitating consideration of the appeal. (iii) In case the petitioner chooses not to avail the remedy of appeal by filing any appeal under Section 112 of the B.G.S.T. Act before the Tribunal within the period which may be specified upon constitution of the Tribunal, the 4/4 respondent- Authorities would be at liberty to proceed further in the matter, in accordance with law. (iv) If the above order is complied with and a sum equivalent to 20 per cent of the remaining amount of the tax in dispute is paid then, if there is any attachment of the bank account of the petitioner pursuant to the demand, the same shall be released. (v) Whatever has been deposited, would be given account in determining the 20 per cent directed to be paid herein.

With the above liberty, observation and directions, the writ petition stands disposed of.

supratim/- (K. Vinod Chandran, CJ) ( Harish Kumar, J) AFR/NAFR NAFR CAV DATE NA Uploading Date 12.03.2024 Transmission Date NA

Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.