M/S. M G Industries O vs. Union Of INDIA

Facts

The petitioner, M/s. M G Industries, filed a writ petition before the Rajasthan High Court at Jaipur. The petition was filed aggrieved by the dismissal of their first appeal, which challenged an assessment order passed under the Rajasthan Goods and Services Tax Act. A significant grievance raised by the petitioner was the non-functional status of the GST Tribunal, despite the implementation of GST in 2017. The Court was informed that the Tribunal had not yet been constituted, and the process for its constitution was ongoing. The respondents indicated that the petition should not be kept pending but should be disposed of with appropriate protection under Section 112(8) of the Rajasthan Goods and Services Tax Act, allowing the petitioner to file an appeal once the Tribunal is constituted.

Held

The Court held that the writ petition could be disposed of on the condition that the petitioner makes the required payment as per the provisions of Section 112(8) of the Rajasthan Goods and Services Tax Act, 2017. The Court directed that further proceedings for the recovery of the balance amount shall not be drawn, provided the petitioner avails the statutory remedy of appeal within a period of three months from the date of the constitution of the Tribunal. This decision was made in line with a previous order passed by the Court in a similar matter (D.B. Civil Writ Petition No.1113/2024) and with the consent of both parties. The Court's reasoning was based on the practical difficulty faced by the petitioner in accessing the appellate mechanism due to the non-constitution of the Tribunal, and the need to provide interim protection while acknowledging the ongoing process of Tribunal formation. The ratio decidendi is that in the absence of a functional appellate tribunal, a taxpayer can seek protection from recovery proceedings by complying with the pre-deposit requirements under the relevant statutory provisions, with liberty to file an appeal upon the tribunal's constitution.

Key Issues

1. Whether the petitioner can be granted protection from recovery proceedings for the balance amount of tax, interest, or penalty, pending the constitution of the GST Tribunal, in light of Section 112(8) of the Rajasthan Goods and Services Tax Act, 2017? The petitioner argued that due to the non-functional status of the GST Tribunal, they are unable to avail the statutory remedy of appeal. They sought protection from recovery of the disputed amount, relying on the provisions of Section 112(8) of the Act and a circular dated 23.03.2020 issued by the Government of Rajasthan, Finance Department (Tax Division). The petitioner agreed to the disposal of the petition on the condition of making payment as per Section 112(8) of the Act. The respondents, represented by the Union of India and the State of Rajasthan, acknowledged that the Tribunal had not been constituted and that the process was ongoing. They agreed that the petition could be disposed of with appropriate protection under Section 112(8) of the Act, allowing the petitioner to file an appeal within a stipulated period from the date the Tribunal is constituted.