M/S Maa Shila Traders vs. The State Of Bihar

Held

The Court acknowledged that the petitioner had challenged the order dated 08.05.2026, passed by the Adjudicatory Authority, through a writ application. The Court noted the State's submission regarding the alternative remedy of appeal under Section 107 of the GST Act. Considering the statutory time provided under Section 107, the Court decided to dispose of the writ application with liberty to the petitioner to file an appeal before the Appellate Authority. The Court directed that if the appeal is filed within one month, the Appellate Authority shall decide it on its merits in accordance with the law, without considering the question of limitation. The Court did not decide on the merits of the penalty and interest liability.

Facts

The petitioner, M/s Maa Shila Traders, filed a writ application challenging an order dated 08.05.2026, which imposed penalty and interest. The petitioner had paid the assessed tax amount without demur. The petitioner contended that no liability for interest and penalty arose as they filed returns regularly and conducted business in accordance with the CGST/BGST Act and Rules. The State argued that verification revealed the petitioner was dealing with a non-existing entity, M/s J.K. Enterprises, and that the petitioner had paid the tax but challenged the penalty and interest. The State also pointed out that an alternative remedy of appeal under Section 107 of the GST Act was available.

Key Issues

1. Whether the petitioner is liable to pay interest and penalty under the CGST/BGST Act and Rules, considering they filed returns regularly and conducted business in accordance with the law? (Question of law) Petitioner's contention: The petitioner argued that there was no liability for interest and penalty as they consistently filed returns and operated their business in compliance with the provisions of the CGST/BGST Act and Rules. They submitted that the tax amount assessed by the Proper Authority was paid without any objection. Revenue/State's contention: The State contended that upon verification, it was discovered that the petitioner was engaged in transactions with a non-existing entity, M/s J.K. Enterprises, and that this supplier was found to be non-existent. The State also raised the issue of the availability of an alternative remedy of appeal under Section 107 of the GST Act, arguing that the writ petition was filed prematurely.