Patel Engineering Limited vs. The State Of Bihar

Facts

The petitioner, Patel Engineering Limited, filed a writ petition before the Patna High Court seeking to avail the statutory remedy of appeal under Section 112 of the Bihar Goods and Services Tax (B.G.S.T.) Act. The petitioner was unable to file an appeal before the Appellate Tribunal due to its non-constitution. This prevented the petitioner 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, upon depositing the stipulated pre-deposit. The respondent State 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 an appeal would commence only after the Tribunal's President entered office. The tax period in dispute is September 2018 to March 2019.

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, if not already deposited, in addition to any amount deposited earlier 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 were deemed to be stayed. The Court also held that this relief cannot be open-ended. Since the order was necessitated by the non-constitution of the Tribunal, 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, observing all statutory requirements. If the petitioner fails 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 noted that similar relief was granted in the case of 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 20 percent of the remaining disputed tax amount? 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 the notification issued by the State authorities under Section 172 of the B.G.S.T. Act acknowledges this difficulty and that the Court should grant relief to balance equities. The revenue/State acknowledged the non-constitution of the Tribunal and the issuance of the removal of difficulties notification. They did not present any argument against the petitioner's claim for a stay, implicitly accepting the situation created by the non-functional Tribunal.