Assessee is entitled to stay on recovery proceedings when Appellate Tribunal is not constituted

Introduction

The case of M/s. BPD Steel Syndicate (P.) (Ltd.) vs. Union of India brought before the Orissa High Court, marked a significant juncture in the realm of tax law. At its core, the case delved into the rights of an assessee when faced with the absence of an Appellate Tribunal. Let’s delve into the details.

Facts of the Case

M/s. BPD Steel Syndicate (P.) (Ltd.), henceforth referred to as “the Petitioner,” challenged an Appellate Order issued by the Revenue Department. Their contention rested on the deprivation of their right to appeal under Section 112 of the Central Goods and Services Tax Act, 2017 (CGST Act), owing to the non-existence of the Appellate Tribunal.

Issue

The crux of the matter lay in determining whether an assessee retains the entitlement to a stay on recovery proceedings in the absence of a constituted Appellate Tribunal.

Case Background

Petitioner’s Writ Petition

The Petitioner, dissatisfied with the Impugned Appellate Order, resorted to legal recourse through a writ petition. Their plea was rooted in the inability to exercise their statutory right of appeal due to the non-constitution of the Appellate Tribunal.

Appellate Tribunal Status

Remarkably, the Appellate Tribunal crucial for adjudicating appeals under the CGST Act was not in existence at the time of the dispute. This absence posed a considerable challenge for the Petitioner in seeking redressal through the appellate process.

Court’s Decision

Legal Interpretation

The Orissa High Court meticulously examined the legal provisions pertinent to the case. It scrutinized Clause 2 of the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019, and the contents of Circular No. 132/02/2020. These elucidated that the initiation of the appeal period hinged upon the constitution of the Appellate Tribunal.

Stay on Recovery Proceedings

Considering the statutory rights enshrined in Section 112 of the CGST Act, the Court opined that the Petitioner could not be deprived of their entitlement due to the non-existence of the Tribunal. Consequently, the Court ordered a stay on the recovery proceedings until the constitution of the Appellate Tribunal, subject to the condition of pre-deposit payment.

Analysis of Legal Provisions

Section 112 of CGST Act

Section 112 of the CGST Act delineates the appellate mechanism available to taxpayers aggrieved by departmental orders. It underscores the significance of timely appeals and the procedural aspects therein.

Statutory Rights

The Court’s decision reaffirms the statutory rights bestowed upon assessees, ensuring that they are not unduly prejudiced by administrative or procedural lapses.

Precedent and Implications

Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019

This legislative instrument elucidates the procedure for appellate filings and establishes the nexus between the constitution of the Appellate Tribunal and the initiation of the appeal period.

Circular No. 132/02/2020

The circular provides further clarity on the procedural nuances concerning the initiation of appeal periods under the CGST Act, reinforcing the importance of the Appellate Tribunal’s constitution.