M/S Vinayak Enterprises vs. The Union Of INDIA

Facts

M/s Vinayak Enterprises, a proprietorship firm, 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 before the Appellate Tribunal. The petitioner was unable to file the appeal due to the non-constitution of the Tribunal. Consequently, the petitioner was also prevented 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, which requires a deposit of certain amounts. The State authorities acknowledged the non-constitution of the Tribunal and issued a notification dated 11.12.2019 under Section 172 of the B.G.S.T. Act, stating that the period of limitation for filing an appeal would commence only after the President of the Tribunal entered office.

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 should not be deprived of this benefit due to the non-constitution of the Tribunal by the respondents. The recovery of the balance amount and any steps taken in this regard were deemed to be stayed. However, the Court also held that the stay cannot be open-ended. To balance equities, the petitioner would be required to present and file their appeal under Section 112 of the B.G.S.T. Act once the Tribunal is constituted and functional, and the President or State President enters office. The appeal must be filed observing statutory requirements after the Tribunal's existence. If the petitioner fails to avail this remedy 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 had been 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 tax in dispute in addition to the amount already deposited under Sub-Section (6) of Section 107 of the B.G.S.T. Act? 2. Whether the stay on recovery of the balance amount should be open-ended, or if there should be a condition for the petitioner to file the appeal once the Tribunal is constituted? Petitioner's Arguments: The petitioner argued that they are being deprived of their statutory remedy of appeal and the consequential benefit of stay on recovery due to the respondents' failure to constitute the Tribunal. They contended that they should not be penalized for a situation beyond their control. Revenue/State's Arguments: The respondents acknowledged the non-constitution of the Tribunal and had issued a notification to address the issue of limitation. They did not appear to contest the petitioner's claim for a stay, but the Court sought to balance equities by imposing conditions on the stay.