M/S Goswami Security Service Private Limited vs. The State Of Bihar

Held

The Court held that the petitioner is entitled to 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 10 percent of the amount of tax in dispute, in addition to any amount already deposited under Sub-Section (6) of Section 107 of the B.G.S.T. Act. The Court reasoned that the petitioner cannot be deprived of this benefit due to the non-constitution of the Tribunal by the respondents. The recovery of the balance amount and any steps taken in this regard will be deemed stayed. However, this stay is not open-ended; the petitioner must file their appeal under Section 112 of the B.G.S.T. Act once the Tribunal is constituted and functional, within a specified period. If the petitioner fails to file the appeal within the stipulated time after the Tribunal's constitution, the respondent authorities will be at liberty to proceed as per law. The Court also directed the release of any attachment on the petitioner's bank account if the ten per cent deposit is made and the order is complied with.

Facts

The petitioner, M/s Goswami Security Service Private Limited, filed a writ petition before the Patna High Court seeking to avail the statutory remedy of appeal before the Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax (B.G.S.T.) Act. However, the Tribunal had not been constituted, preventing the petitioner from filing an appeal and consequently from obtaining a stay on the recovery of the balance tax amount as provided under Section 112(8) and (9) of the B.G.S.T. Act. The petitioner was also unable to avail the benefit of reduced pre-deposit for appeal, which had been amended to ten per cent from twenty per cent effective November 1, 2024. The Court noted a previous judgment in SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others, which allowed deposit of twenty per cent of the disputed amount until the Tribunal was constituted.

Key Issues

1. Whether the petitioner is entitled to the statutory benefit of stay of recovery under Section 112(9) of the B.G.S.T. Act, despite the non-constitution of the Appellate Tribunal, upon depositing ten per cent of the disputed tax amount? The petitioner argued that due to the non-constitution of the Tribunal by the respondents, they are being deprived of their statutory remedy of appeal and the consequential benefit of stay of recovery. They contended that they should be allowed to deposit ten per cent of the disputed tax amount, as per the amended provisions, and be granted a stay on recovery until the Tribunal is functional. They relied on the principle that the assessee should not suffer due to the inaction of the authorities. The respondent State argued that the statutory provisions must be followed, and without a functional Tribunal, the appeal process and stay mechanism cannot be invoked. However, the judgment does not explicitly record detailed arguments from the respondent State beyond their general role as revenue authorities.