Statutory stay under Section 112(9) extended where GST Tribunal not constituted; petitioner directed to deposit 20% and file appeal to safeguard remedy

Case Details

Case Title: Jaiswal Medical Stores v. Joint Commissioner (Appeal) State Tax, Bilaspur & Others
Court: High Court of Chhattisgarh at Bilaspur
Petition No.: WPT No. 5 of 2023
Judgment Date: 02.09.2024
Coram: Hon’ble Justice Ravindra Kumar Agrawal
Category of Dispute: Appeal Remedy & Statutory Stay – Input Tax Demand
Relevant Sections: Section 107, Section 109, Section 112(9) of the CGST/State GST Act, 2017

Facts of the Case (Paras 1–5)

The petitioner, Jaiswal Medical Stores, challenged the appellate order dated 17.10.2022 passed by the Joint Commissioner (Appeal), State Tax, Bilaspur, in Appeal No. 60/GST/2022. Originally, the Assistant Commissioner, State Tax, Korba (Respondent No. 2), vide order dated 28.09.2021, imposed tax, interest, and penalty for FY 2019–20. On appeal under Section 107, partial relief was granted with a reduction of ₹2,24,324, but the remaining demand was affirmed.

As per statute, a second appeal lies under Section 112 before the GST Appellate Tribunal. However, since the Tribunal had been notified but not made functional (no President/Members appointed), the petitioner invoked writ jurisdiction, stating that it had already deposited 20% of the demand in line with Section 107(6).

Questions before the Court (Paras 4–7)

• Whether the petitioner, in absence of a functional GST Appellate Tribunal, could be deprived of the statutory appellate remedy?

• Whether recovery could proceed despite the petitioner depositing 20% of the disputed tax as precondition for appeal?

• Whether the statutory stay under Section 112(9) should be deemed operative until the Tribunal becomes functional?

Observations of the Court (Paras 6–8)

The Court noted that similar issues were considered by:

• Patna High Court in M/s Cohesive Infrastructure Developers Pvt. Ltd. v. CBIC (CWJC No. 15438/2023, decided 30.10.2023), where statutory stay was extended subject to deposit of 20% of the disputed tax.

• Bombay High Court in Rochem India Pvt. Ltd. v. Union of India (W.P. No. 10883/2019, order dated 08.02.2023).

The Court emphasized that:

• The statutory right of appeal under Section 112 cannot be frustrated merely because of non-constitution of the Tribunal.

• The State itself had, vide Notification dated 05.12.2019, extended limitation until the President of the Tribunal enters office.

• Equities can be balanced by allowing filing of appeal and granting statutory stay, with liberty to the State to proceed if the appeal is not filed once Tribunal becomes functional.

Judgment / Verdict (Paras 9–10)

The High Court disposed of the petition with the following directions:

1. The petitioner shall deposit 20% of the disputed demand within 30 days, if not already done.

2. The petitioner shall file an appeal under Section 112 before the GST Appellate Tribunal within the extended limitation period once the Tribunal is constituted and functional.

3. The statutory stay under Section 112(9) will remain operative until the appeal is decided on merits.

4. If the appeal is not filed within the prescribed time after Tribunal becomes functional, the State will be free to recover the balance demand.

5. Any amount already deposited shall be adjusted after verification.

Thus, the writ petition was disposed of with protective directions safeguarding appellate remedy and staying coercive recovery.

Table of Cases Referred

Between Fine Lines (Practical Takeaway)

This ruling reassures businesses that their statutory right to appeal under GST law will not be defeated due to the government’s delay in constituting the GST Appellate Tribunal. As long as taxpayers deposit the mandated 20% of disputed tax, recovery proceedings will remain stayed, and their appeals will be heard once the Tribunal becomes functional. For trade, this ensures that litigation can be pursued without the immediate threat of recovery, preserving both liquidity and legal rights.

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