M/S Utkarsh Sfatik Limited vs. The State Of Bihar

Facts

M/s Utkarsh Sfatik Limited (the petitioner) filed a writ petition seeking to avail the statutory remedy of appeal before the Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax Act (B.G.S.T. Act). However, the Tribunal had not been constituted, preventing the petitioner from filing an appeal and consequently from availing the benefit of a stay on recovery of the balance tax amount, as provided under Section 112(8) and (9) of the B.G.S.T. Act. 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 limitation period for filing an appeal would commence only after the President of the Tribunal entered office. The petitioner sought directions from the High Court.

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 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 related steps would be stayed. The Court also clarified that this stay cannot be open-ended. 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 further directed that if the conditions are complied with, any attachment of the petitioner's bank account pursuant to the demand shall be released. The issue of the exact period for filing the appeal post-constitution was left to be determined upon the Tribunal's establishment.

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? Petitioner's Argument: The petitioner argued that they are being deprived of their statutory remedy of appeal and the consequential benefit of stay due to the inaction of the respondents in constituting the Tribunal. They contended that they should not be prejudiced by this administrative failure and should be granted the stay upon fulfilling the deposit requirement. Revenue/State's Argument: The respondent State authorities acknowledged the non-constitution of the Tribunal and had issued a notification under Section 172 of the B.G.S.T. Act to address the situation. Their stance implicitly supported the need for a mechanism to deal with such circumstances, as evidenced by their participation in the proceedings and the court's ultimate directions.