Unconditional Stay Granted Due to Non-Constitution of Tribunal and Circular Guidelines.
Issue: Whether an unconditional interim stay should be granted on an appellate order passed under Section 107 when the GST Appellate Tribunal is not constituted, and a circular debarring recovery of outstanding dues is in effect.
Facts:
- The assessee filed a petition challenging an order passed by the appellate authority under Section 107.
- The assessee relied on Circular No. 224/18/2024-GST, dated 11-7-2024, which debarred guidelines for recovery of outstanding dues until the Appellate Tribunal becomes operational.
Decision:
- The court held that the assessee was able to make out a prima facie case.
- An unconditional stay of the demand of the appellate order was granted for a period of two weeks.
- If the assessee made a payment of 10 percent of the balance amount of tax in dispute, in addition to the amount already paid under Section 107(6), the interim stay would continue until the disposal of the writ petition or until further orders.
- The ruling was in favor of the assessee.
Key Takeaways:
- The non-constitution of the GST Appellate Tribunal can justify the grant of unconditional interim stays.
- Circulars debarring recovery of outstanding dues, such as Circular No. 224/18/2024-GST, can influence court decisions regarding interim relief.
- Courts may grant unconditional stays initially and then impose conditions, such as payment of a percentage of the disputed tax, for the stay to continue.
- Section 112 of Central Goods and Services Tax Act, 2017/ West Bengal Goods and Services Tax Act, 2017 applied to this case.
HIGH COURT OF CALCUTTA
Adani Wilmar Ltd.
v.
Deputy Commissioner of State Tax
Rajarshi Bharadwaj J.
WPA 29243 of 2024
JANUARY 22, 2025
Debashis Ghosh and Rahul Dhanuka for the Petitioner. Anirban Ray, Md. T.M. Siddiqui, T. Chakraborty, Ms. S. Shaw and S. Sanyal for the Respondent.
ORDER
1. In this writ petition the writ petitioners challenge the impugned appellate order dated 18th June, 2024 passed by the respondent no.2.
2. Learned Counsel appearing for the petitioners further relies on Circular No.224/18/2024-GST dated 11th July, 2024 issued by the Ministry of Finance debarring the guidelines for recovery of outstanding dues in cases wherein first appeal has been disposed of, till Appellate Tribunal comes into operation. The said circular inter alia says:
“4. In order to facilitate the taxpayers to make the payment of the amount of pre-deposit as per subsection (8) of Section 112 of CGST Act, and to avail the benefit of stay from recovery of the remaining amount of confirmed demand as per sub-section (9) of Section 112 of CGST Act, it is hereby clarified that in cases where the taxpayer decides to file an appeal against the order of the appellate authority and wants to make the payment of the amount of pre-deposit as per subsection (8) of Section 112 of CGST Act, he can make the payment of an amount equal to the amount of predeposit by navigating to Services Ledgers Payment towards demand, from his dashboard. The taxpayer would be navigated to Electronic Liability Register (ELL) Part-II in which he can select the order, out of the outstanding demand orders, against which payment is intended to be made. The amount so paid would be mapped against the selected order and demand amount would be reduced in the balance liability in the aforesaid register. The said amount deposited by the taxpayer will be adjusted against the amount of predeposit required to be deposited at the time of filing appeal before the Appellate Tribunal.
5. The taxpayer also needs to file an undertaking/declaration with the jurisdictional proper officer that he will file appeal against the said order of the appellate authority before the Appellate Tribunal, as and when it comes into operation, within the timelines mentioned in Section 112 of the CGST Act read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019. On providing the said undertaking and on payment of an amount equal to the amount of pre- deposit as per the procedure mentioned in para 4 above, the recovery of the remaining amount of confirmed demand as per the order of the appellate authority will stand stayed as per provisions of sub- section (9) of Section 112 of CGST Act.
6. In case, the taxpayer does not make the payment of the amount equal to amount of pre- deposit or does not provide the undertaking/declaration to the proper officer, then it will be presumed that taxpayer is not willing to file appeal against the order of the appellate authority and in such cases, recovery proceedings can be initiated as per the provisions of law. Similarly, when the Tribunal comes into operation, if the taxpayer does not file appeal within the timelines specified in Section 112 of the CGST Act read with Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019, the remaining amount of the demand will be recovered as per the provisions of law.”
3. Mr. Siddiqui, Learned Additional Government Pleader representing the State submits that the writ petition may be heard on the usual terms provided under Section 112(8) of the said Act.
4. Having heard the learned advocates appearing for the respective parties and having considered the materials on record as also taking note of the fact that the Appellate Tribunal is yet to be constituted, I am of the view that the petition should be heard.
5. Since, the petitioners have been able to make out a prima facie case, there shall be an unconditional stay of the demand of the Appellate order dated 18th June, 2024, for a period of two weeks from date.
6. In the event, the petitioners makes payment of 10% of the balance amount of tax in dispute, in addition to the amount already deposited in terms of Section 107(6) of the said Act, within two weeks from date, the interim order passed herein, shall continue till the disposal of the writ petition or until further order, whichever is earlier.
7. Let affidavit-in-opposition to the present writ petition be filed within a period of six weeks from date, reply, if any, be filed within one week thereafter.
8. Liberty to mention after expiry of the period of exchange of affidavits as mentioned hereinabove.