Statutory Stay Allowed Despite Non-Constitution of GST Appellate Tribunal

Case Title: M/s Eff-Tech Infraengineers v. State of Chhattisgarh
Court Name: High Court of Chhattisgarh, Bilaspur
Petition Number: WPT No. 203 of 2024
Relevant Section: Section 107 and 112(9) of CGST Act, 2017
Category of Dispute: Input Tax Credit
Date of Judgment: 27.11.2024
Relevant CGST Sections: Section 107, Section 112(9) of CGST Act
CGST Rules: N.A.

Facts of the Case (Para 4)

• The petitioner, a partnership firm, was subjected to a demand order dated 17.08.2021 (FORM GST DRC–07) by the Assistant Commissioner for excess Input Tax Credit of ₹4,59,600 with interest and penalty.

• The firm contended that tax was already paid by suppliers through GSTR-3B and GSTR-1.

• The appeal before the Joint Commissioner (Appeals) was dismissed on 25.09.2023.

• The petitioner challenged this dismissal, citing that the Appellate Tribunal was not functional and sought relief under Section 112(9) of CGST Act.

Question(s) in Consideration (Paras 5, 8, 9)

1. Whether the petitioner is entitled to a statutory stay under Section 112(9) despite non-constitution of the Appellate Tribunal?

2. Whether recovery steps can proceed in absence of the Appellate Tribunal if the petitioner has deposited the requisite 20% of the disputed amount?

Observation of the Court (Paras 7 to 10)

• The Court noted that similar matters had been adjudicated by the Patna and Bombay High Courts, notably M/s Cohesive Infrastructure Developers Pvt. Ltd. and Rochem India Pvt. Ltd.

• It affirmed that the benefit of stay under Section 112(9) cannot be denied to the petitioner due to the government’s failure to constitute the GST Appellate Tribunal.

• The Court emphasized that upon deposit of 20% of the disputed amount, statutory stay must apply until the Tribunal becomes operational.

• It clarified that the appeal must be filed within 30 days from the receipt of the tribunal’s operational order, failing which the authorities are at liberty to proceed.

Judgment of the Court (Para 10-12)

• The writ petition was disposed with liberty to the petitioner to file an appeal before the Tribunal when it becomes functional.

• The petitioner must deposit 20% of the disputed tax within 30 days of receiving the Court’s order.

• Until the appeal is filed and decided, statutory stay under Section 112(9) shall apply.

• However, this benefit is conditional—if 20% deposit is not made, the stay will not be operative.

🧵Between Fine Lines (Simple Summary):

• The High Court protected the petitioner from coercive recovery due to the non-constitution of the GST Appellate Tribunal.

• On depositing 20% of the tax, the petitioner gains stay from further proceedings until the Tribunal hears the appeal.

• Appeal must be filed within 30 days of Tribunal becoming functional.

• The order does not help petitioners who have not yet deposited the 20% amount.

• Relief was based on parity with other High Court rulings.

📚 Summary of Referred Cases: