M/S Magadh Tube Well Engineering Works vs. The Union Of INDIA

Facts

The petitioner, M/s Magadh Tube Well Engineering Works, 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 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 authorities acknowledged the non-constitution of the Tribunal and issued a notification (Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019) under Section 172 of the B.G.S.T. Act, stating that the limitation period for filing appeals would commence only after the Tribunal's constitution and the President's assumption of office.

Held

The Court held that the petitioner cannot be deprived of the statutory benefit of stay under Section 112(9) of the B.G.S.T. Act due to the non-constitution of the Tribunal by the respondents. The Court directed that subject to the deposit of 20 percent of the remaining amount of tax in dispute (if not already deposited, in addition to amounts deposited under Section 107(6)), the petitioner shall be extended the benefit of stay, and recovery of the balance amount shall be deemed stayed. The Court reasoned that this relief is necessary to balance equities, as the inability to appeal is a consequence of the respondents' failure to constitute the Tribunal. However, the Court also held that this stay cannot be 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. If the petitioner fails to file the appeal within the period specified upon the Tribunal's constitution, the respondents would be at liberty to proceed. The Court also directed the release of any attachment of the petitioner's bank account upon compliance with the deposit requirement.

Key Issues

1. Whether the petitioner can be deprived of the statutory benefit of stay under Section 112(9) of the B.G.S.T. Act due to the non-constitution of the Appellate Tribunal by the respondents? The petitioner argued that they are being prevented from availing a statutory remedy due to the inaction of the respondents in constituting the Tribunal. They contended that the benefit of stay, which is conditional upon depositing a portion of the disputed tax, should be extended to them. The revenue/state acknowledged the non-constitution of the Tribunal and referred to the notification issued under Section 172 of the B.G.S.T. Act, which deals with the removal of difficulties. The core issue is how to balance the petitioner's right to statutory remedy with the procedural impediment caused by the non-functional Tribunal.