M/S Kwality Traders vs. The Commissioner Commercial Tax

Facts

The petitioner, M/s Kwality Traders, challenged an order dated 07.10.2022 passed by the Additional Commissioner (Appeal) (SGST), Chhattisgarh, which dismissed their statutory appeal. The original demand order, imposing tax, interest, and penalty for the period 01.04.2019 to 30.09.2019, was passed by the Joint Commissioner of State Tax, Bilaspur Division-I, on 22.06.2020. The petitioner had filed a first appeal under Section 107(1) of the Chhattisgarh Goods and Service Tax Act, 2017. The petitioner states they deposited 20% of the statutory amount required before filing the appeal. The writ petition was filed because, although the Goods and Service Tax Appellate Tribunal has been notified in Chhattisgarh, its president and members have not yet been appointed, preventing the filing of a second appeal.

Held

The Court held that the petitioner cannot be deprived of their statutory remedy of appeal due to the non-constitution of the GST Appellate Tribunal by the respondents. Citing judgments from the Patna and Bombay High Courts, the Court directed that the petitioner shall file their appeal before the appellate tribunal within 30 days from the date of the order. The statutory stay under Section 112(9) of the Act would remain in operation until the appeal is decided on its merits. The Court also stipulated that if the appeal is not filed within the prescribed period, the State would be at liberty to proceed with recovery. The Court did not explicitly decide on the restoration of GST registration, focusing on enabling the appeal process.

Key Issues

1. Whether the petitioner is entitled to file a writ petition seeking restoration of GST registration and setting aside of the appellate order when a second appeal mechanism is statutorily available, albeit non-functional due to the absence of the GST Appellate Tribunal's constitution? (Mixed question of law and fact, turning on Section 107 and Section 109 of the CGST Act, 2017). Petitioner's arguments: The petitioner argued that due to the non-constitution of the GST Appellate Tribunal, they are unable to avail the statutory remedy of a second appeal. They relied on judgments from the Patna High Court in M/s Cohesive Infrastructure Developers Pvt. Ltd. Vs. The Central Board of Indirect Taxes and others and the Bombay High Court in Rochem India Pvt. Ltd. Vs. The Union of India and others, which permitted filing appeals once the Tribunal is constituted. They also pointed to a notification extending the period of limitation. Revenue's arguments: The State/Respondents did not dispute the petitioner's preposition regarding the non-constitution of the Tribunal and the consequent inability to file a second appeal.