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

Facts

M/s Patna Sanitary Emporium, through its proprietor, 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 the appeal due to the non-constitution of the Appellate Tribunal. This non-constitution also 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 amounts. The State authorities acknowledged the non-constitution of the Tribunal and issued a notification under Section 172 of the B.G.S.T. Act to address difficulties, stating that the limitation period for filing appeals would commence only after the Tribunal's President entered office.

Held

The Court held that the petitioner must 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 the 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. The petitioner would be required to present/file their appeal under Section 112 of the B.G.S.T. Act once the Tribunal is constituted and made functional. The ratio is that a taxpayer should not suffer due to administrative delays in the constitution of statutory appellate bodies, and interim relief, including stay of recovery, should be granted upon fulfillment of stipulated conditions, with a clear direction to file the appeal once the forum becomes functional. The Court directed that if the petitioner chooses not to avail the remedy of appeal after the Tribunal is constituted, the respondent authorities would be at liberty to proceed in accordance with law.

Key Issues

1. Whether the petitioner is entitled to the statutory benefit of stay of recovery of the balance amount of tax under Section 112(9) of the B.G.S.T. Act, despite the non-constitution of the Appellate Tribunal, upon depositing 20 percent of the disputed tax amount in addition to amounts already deposited under Section 107(6)? Petitioner's Argument: The petitioner argued that they are being deprived of a statutory remedy due to the respondents' failure to constitute the Tribunal. They contended that they should not be penalized for this administrative lapse and should be granted the benefit of stay as provided by law. Revenue's Argument: The respondent State authorities acknowledged the non-constitution of the Tribunal and had issued a notification under Section 172 of the B.G.S.T. Act to manage the situation. They did not explicitly argue against the petitioner's entitlement to stay but implicitly accepted the court's role in providing interim relief.