M/S Patna Sanitary Emporium vs. The State Of Bihar

Facts

M/s Patna Sanitary Emporium (the petitioner) 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 because the Tribunal had not been constituted. This non-constitution prevented the petitioner from availing the benefit of stay of recovery of the balance tax amount, which is contingent upon depositing a specified portion of the disputed tax as per Section 112(8) of the B.G.S.T. Act. The 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 appeals would commence only after the President of the Tribunal entered office.

Held

The Court held that the petitioner should not be deprived of the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act due to the non-constitution of the Tribunal by the respondents. The Court directed that upon 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 petitioner would be extended the benefit of stay. The recovery of the balance amount and any steps taken towards it would be deemed stayed. The Court also clarified that this relief cannot be open-ended. 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 fails to file an appeal within a period specified upon the Tribunal's constitution, the respondent authorities would be at liberty to proceed in accordance with law. This relief was granted in line with similar relief provided in the case of SAJ Food Products Pvt. Ltd. vs. The State of Bihar & Others.

Key Issues

1. Whether the petitioner can be deprived of the statutory benefit of stay of recovery of the balance amount of tax under Section 112(9) of the B.G.S.T. Act due to the non-constitution of the Appellate Tribunal by the respondents? (Question of law) Petitioner's contention: The petitioner argued that they are being deprived of a statutory remedy and the benefit of stay due to the inaction of the respondents in constituting the Tribunal. They sought directions from the Court to ensure they are not prejudiced by this delay. Revenue's contention: The respondent State authorities acknowledged the non-constitution of the Tribunal and had issued a notification to address the issue of limitation periods. They did not contest the petitioner's right to seek relief in light of the non-functional Tribunal.