Dayanand Prasad vs. The State Of Bihar
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The petitioner, M/s Dayanand Prasad, is aggrieved by an assessment order that imposed tax liability based on deductions made by the Executive Engineer, Road Division, on his behalf as Tax Deducted at Source (TDS). The petitioner contended that these deductions were wrongly attributed to him, as they pertained to another entity, Dayanand Prasad Sinha and Company. The assessment order stated that the works on which tax was deducted were not disclosed in the petitioner's returns. The petitioner's appeal against this order was dismissed, with the appellate authority noting a lack of evidence to support the petitioner's claim that deductions of another concern were mistakenly shown in his accounts. The petitioner then filed a writ petition before the High Court.
Held
The Court acknowledged that the petitioner's appeal was dismissed on facts, and ordinarily, it would not invoke jurisdiction under Article 226. However, it recognized that the petitioner's statutory remedy of appeal to the Appellate Tribunal under Section 112 of the B.G.S.T. Act was unavailable due to the non-constitution of the Tribunal. This non-constitution also prevented the petitioner from availing the benefit of a stay of recovery under Section 112(8) and (9) upon depositing the prescribed amounts. The Court noted the State authorities' acknowledgment of this issue and their notification regarding the commencement of the limitation period for appeals. Therefore, the Court directed that subject to the petitioner depositing 20 percent of the remaining disputed tax (in addition to any amount already deposited under Section 107(6)), the statutory benefit of stay under Section 112(9) should be extended. The recovery of the balance amount and any related steps would be stayed. The Court also stipulated that the petitioner must file his appeal under Section 112 once the Tribunal is constituted and functional. If the petitioner fails to file the appeal within the specified period after the Tribunal's constitution, the authorities would be at liberty to proceed. The Court also ordered the release of any bank account attachment if the 20 percent deposit is made.
Key Issues
1. Whether the petitioner is entitled to relief under Article 226 of the Constitution of India, given that the appeal was dismissed on facts and a statutory remedy of appeal to the Appellate Tribunal exists under Section 112 of the Bihar Goods and Services Tax (B.G.S.T.) Act? 2. Whether the petitioner is deprived of his statutory remedy of appeal and the consequential benefit of stay of recovery under Section 112(8) and (9) of the B.G.S.T. Act due to the non-constitution of the Appellate Tribunal? Petitioner's Arguments: The petitioner argued that the deductions were wrongly attributed to him and that he was deprived of his statutory remedy due to the non-constitution of the Tribunal. He sought relief from the High Court to address this situation. Revenue's Arguments: The learned Government Advocate brought to the Court's notice Section 39 of the GST Act, which prohibits rectification of errors. The respondents acknowledged the non-constitution of the Tribunal and had issued a notification (Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019) to address the removal of difficulties, stating that the period of limitation for appeal would commence only after the Tribunal's constitution and the entry of its President or State President into office.
Sections Cited
Section 39, Section 107, Section 112, Section 172
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Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 25-07-2023 The petitioner is aggrieved with the fact that the mistake committed by the Executive Engineer, Road Division has resulted in mulcting of liability on the petitioner. Admittedly, the assessment was based on the deduction made by the Executive Engineer, Road Division and paid to the Department on behalf of the works contractor, the petitioner 2/5 herein.
The petitioner submitted that it was wrongly paid on his behalf since there is another concern called Dayanand Prasad Sinha and Company, which is a separate entity.
The assessment order, however, indicated that the tax was assessed on the basis of the deductions made by the Executive Engineer, Road Division and paid to the Department, on behalf of the petitioner, as TDS. The allegation was that the works on which the tax was deducted was not disclosed by the petitioner in the returns filed.
The assessment order was challenged in appeal which also was dismissed. In fact, the specific contention of the appellant-petitioner that deductions of another concern have been made and shown in the account of the petitioner, was specifically rejected by the Tribunal. The Tribunal also noticed that there was absolutely no evidence produced to substantiate the contention.
The learned Government Advocate brings our notice to Section 39 of the GST Act, which also prohibits the petitioner to make a rectification of the error, if any, caused.
In any event, the appeal having been dismissed on facts, we are not inclined to invoke the juri iction under Article 3/5 226 of the Constitution, however, the petitioner essentially has a statutory remedy of appeal against the impugned order before the Appellate Tribunal (hereinafter referred to as "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. 9. 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 4/5 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 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 5/5 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 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.
With the above liberty, observation and directions, the writ petition stands disposed of.
Prakash/avinash (K. Vinod Chandran, CJ) (Partha Sarthy, J) AFR/NAFR CAV DATE N/A Uploading Date 28.07.2023 Transmission Date N/A
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.