Vihaan Networks Limited Vs The State of Bihar (Patna High Court)
The present writ application has been filed seeking quashing of a notice bearing Process No. 336 dated 25.01.2023, issued by the Deputy Commissioner of State Tax, Special Circle, Patna, asking the petitioner to deposit outstanding amount of Rs. 97,24,149/- against the State Goods and Services Tax (SGST) by 27.01.2023.
The petitioner is a company incorporated under the provisions of the Companies Act, 1956, and is registered under Bihar Goods and Services Tax Rules, 2017 (BGST Rules), vide GSTIN 10AACCR2460C1Z6. As pleaded in the writ application, a notice was issued to the petitioner on 02.02.2018 by the Deputy Commissioner (In-charge Patna), Special Circle, under Rule 121 of the BGST Rules, calling upon the petitioner to furnish returns, records, books of accounts and other evidence in support of the claim for the carry forward of credit amounting to Rs. 77,38,250/-, filed in Form TRAN-1 under Rule 117 of the BGST Rules 2017. The petitioner is said to have responded to the said notice. Subsequently, a show-cause notice was issued to the petitioner under Section 73 of the Bihar Goods and Services Tax Act (BGST Act), bearing Process No. 21 dated 14.09.2018 in Form-DRC-01 proposing a demand of Rs. 77,38,250/-.
It is the petitioner’s case that the show-cause notice was not served upon the petitioner, rather it obtained a copy of the said show-cause notice subsequently on 18.12.2018. It is the petitioner’s further case that without affording any opportunity of hearing, the demand, so proposed vide notice dated 14.09.2018, was confirmed along with interest and penalty, totalling a sum of Rs. 1,02,53,184/-.
The petitioner, thereafter, preferred an appeal under Section 107(1) of the BGST Act 2017. In order to maintain his appeal against the adjudication order, he had deposited 10% of the disputed tax amount on 02.01.2019. The Appellate Authority, i.e., the Additional Commissioner, State Tax (Appeal), Central Division, Patna, vide an order dated 19.11.2020, disposed of the petitioner’s appeal with certain modification by revising the demand of tax from a sum of Rs. 77,38,250/- to 75,76,852/-.
Section 112 of the BGST Act provides for an appeal before the Goods and Services Tax Appellate Tribunal, which, admittedly, has not been constituted. Petitioner, thus, has a grievance that had the Tribunal been functioning it would have availed the remedy by preferring an appeal against the order of the Appellate Authority upon payment of the amount as contemplated under sub-Section (8) of Section 112 of the Act. By deeming fiction, the recovery proceedings for balance amount would have been stayed by virtue of sub-Section (9) of Section 112 of the BGST Act.
There is specific statement made in paragraph 13 of the writ petition that though the petitioner had made its intention clear to prefer an appeal before the Appellate Tribunal in terms of Section 112 of the BGST Act 2017, the department kept on insisting for recovery of the entire amount. In order to buy peace and to put quietus to the repeated demand of the department, the petitioner, on 31.03.2021, deposited a sum of Rs. 17,00,757/-, which, in fact, is somewhat in excess of 20% of the remaining amount of tax in dispute. This deposit is in addition to the 10% of the remaining amount of tax in dispute which he had been deposited so as to comply with the requirement of sub-Section (6) of Section 107 of the Act to, ensure filing of Appeal before the Appellate Authority.
Learned counsel for the petitioner has argued that the petitioner has deposited an amount slightly in excess of the amounts requisite for filing an appeal before the Appellate Tribunal. The appeal, however, cannot be filed and the petitioner is deprived of his statutory remedy of appeal before the Appellate Tribunal under Section 112 of the BGST Act, since the Appellate Tribunal has not been constituted till date. Nonetheless, the petitioner has complied with the requirements of Section 112 (8) of the BGST Act and is entitled to stay of recovery proceedings for the balance amount by deeming fiction contained under Section 112(9) of the BGST Act.
Section 112(8) and Section 112(9) of the BGST Act, read as under:-
“(8) No appeal shall be filed under Sub-Section (1), unless the appellant has paid-
(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and
(b) a sum equal to twenty percent of the remaining amount of tax in dispute, in addition to the amount paid under Sub-Section (6) of the Section 107, arising from the said order, in relation to which the appeal has been filed.
(9) Where the appellant has paid the amount as per Sub-Section (8), the recovery proceedings for the balance amount shall be deemed to be stayed till the disposal of the appeal.”
As has already been noticed, there is no Tribunal constituted in accordance with Section 109 of the BGST Act. Our attention has been drawn to an order issued by the State of Bihar under Section 172 of the BGST Act for removal of difficulties. Clause 2 of which reads as under:-
“2. For the removal of difficulties, it is hereby clarified that for the purpose of calculating,-
(a) the “three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal” in sub-section (1) of Section 112, the start of the three months period shall be considered to be the later of the following dates:-
(i) date of communication of order; or
(ii) the date on which the President or the State President, as the case may be, of the Appellate Tribunal after its constitution under Section 109, enters office;”
It is evident from the aforesaid order that the State of Bihar acknowledging the difficulty in availing remedy of appeal before the Appellate Tribunal due to non-constitution of the Tribunal in accordance with the provision of the BGST Act, has issued a notification dated 11-12-2019 for removal of this difficulty. The notification provides that the period of limitation for the purpose of preferring an appeal under Section 112 shall start from the date on which the President or the State President, as the case may be, of the Appellate Tribunal after its constitution under Section 109, enters office.
It is apparent thus that the petitioner’s statutory right to prefer appeal under Section 112 of the BGST Act still survives and is not barred by limitation. The petitioner is not only willing to prefer an appeal, but claims to have deposited the requisite amount for preferring Appeal before the Appellate Tribunal, as also for stay of recovery proceedings as per Section 112(9) of the BGST Act. On account of the absence of the Tribunal, petitioner has not been able to do so.
The situation arising out of non-existence of the Tribunal has been acknowledged by the State of Bihar by exercising its power under Section 172 of the Act.
In such view of the matter, we are prima facie satisfied that it would be unjust for the State respondents to proceed for recovery of the balance amount, when they have not constituted the Appellate Tribunal.
From the pleadings in the writ petition, this Court would find that the petitioner has been able to make out a strong prima facie case. On account of non constitution of the forum of Appellate Tribunal, by the authorities, the petitioner cannot be deprived of the statutory remedy under Section 112 (8) and (9) of the BGST Act. The Court, therefore, is of the opinion that interest of justice and balance of convenience also lies in favour of grant of interim relief to the petitioner.
Accordingly, the impugned notice stands stayed.
List this case on 01.03.2023, to be taken up at 10:30 A.M., by which time a counter affidavit must be filed on behalf of the State of Bihar.
