Interim relief granted in GST appeal where Tribunal is not constituted, requiring 10% additional deposit for stay.

Interim relief granted in GST appeal where Tribunal is not constituted, requiring 10% additional deposit for stay.

Issue:

When an assessee files a writ petition challenging an order of the first appellate authority (under Section 107 of the CGST/WGST Act, 2017) due to the non-constitution of the Goods and Services Tax Appellate Tribunal (GSTAT), whether the High Court should grant interim relief, and if so, what conditions should be imposed for such relief.

Facts:

• The assessee filed a petition challenging an order passed under Section 107 of the CGST/WGST Act, 2017, which itself arose from an order passed under Section 74 (demand of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of¹ facts).
• A key fact was that the Goods and Services Tax Appellate Tribunal (GSTAT), the next appellate forum under Section 112, was “yet to be constituted.” This meant the assessee had no statutory forum to appeal to.
• The assessee had already paid a certain amount under Section 107(6) (which requires a pre-deposit of 10% of the disputed tax for filing a first appeal).

Decision:

The court noted the non-constitution of the Appellate Tribunal and decided to hear the writ petition. Having found that the assessee had made out a prima facie case, the court directed the assessee to deposit an additional 10 percent of the remaining amount of tax in dispute (i.e., over and above the amount already paid under Section 107(6)). Consequently, upon this deposit, there would be an unconditional stay of the demand made in the impugned order until the disposal of the writ petition or until further order, whichever is earlier. The decision was partly in favor of the assessee.

Key Takeaways:

• Access to Justice due to Non-Constitution of Tribunal: When a statutory appellate forum (like GSTAT) is not yet constituted, it effectively denies the assessee their statutory right to appeal. In such situations, writ courts (High Courts) often intervene to ensure access to justice.
• Interim Relief by High Court: High Courts have the power to grant interim relief under their writ jurisdiction (Article 226 of the Constitution of India) when a statutory remedy is unavailable or ineffective.
• Conditions for Interim Stay: While granting an interim stay, courts often impose conditions, particularly a partial pre-deposit, to balance the interests of the revenue with the assessee’s right to appeal.
• Pre-deposit under Section 107(6): Section 107(6) of the CGST/WGST Act requires a pre-deposit of 10% of the disputed tax for filing an appeal before the First Appellate Authority (Commissioner Appeals).
• Additional Pre-deposit for Writ Petition: In this case, the court asked for an additional 10% of the remaining disputed tax (after accounting for the 10% already paid under Section 107(6)). This is a common practice in such scenarios, reflecting the pre-deposit required for the next stage of appeal (which would typically be before the Tribunal under Section 112, requiring a 20% pre-deposit of the disputed tax). The total pre-deposit effectively reaches 20% of the disputed tax as would be required for a GSTAT appeal.
• Unconditional Stay: Once the specified pre-deposit is made, the court generally grants an unconditional stay on the remaining demand to protect the assessee from coercive recovery actions during the pendency of the writ petition.
• Temporary Nature of Relief: The stay granted by the High Court is interim and typically lasts until the writ petition is disposed of or until the Tribunal becomes functional, allowing the assessee to pursue their statutory appeal.