Bhagwati Trading Company vs. The Union Of INDIA

Facts

The petitioner, Bhagwati Trading Company, 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 (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 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 Tribunal's constitution and the President's assumption of office. The petitioner sought relief from the High Court due to this procedural deadlock.

Held

The Court held that the petitioner should 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 themselves. The recovery of the balance amount and any steps taken in this regard would be deemed stayed. However, the Court also opined that this relief of stay cannot be open-ended. Therefore, 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 chooses not to file an appeal within the period specified upon the Tribunal's constitution, the respondent authorities would be at liberty to proceed in accordance with law. The Court relied on a previous decision in SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others.

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 a specified portion of the disputed tax amount? Petitioner's contention: The petitioner argued that they are being deprived of their statutory right to appeal and the consequential benefit of stay due to the respondents' failure to constitute the Tribunal. They contended that they should not suffer due to this administrative lapse and should be granted the stay upon fulfilling the deposit requirements as per Section 112(8). Revenue/State's contention: The respondents acknowledged the non-constitution of the Tribunal and had issued a notification under Section 172 to address the issue of limitation. While not explicitly arguing against the petitioner's entitlement to a stay, their actions indicated a procedural framework for dealing with the situation. The judgment notes that the respondent State authorities acknowledged the fact of non-constitution of the Tribunal.