In a recent ruling, the Patna High Court granted relief by staying the recovery of Goods and Services Tax ( GST ) and reducing the mandatory pre-deposit for appeals from 20% to 10%. This decision was made due to the government’s failure to constitute the Goods and Services Tax ( GST ) Tribunal. Maa Sunaina Construction Private Limited, the petitioner is a construction company based in Patna, Bihar.

The petitioner was involved in a tax dispute with the government under the Central Goods and Services Tax (CGST) and Bihar Goods and Services Tax (BGST) Acts. Boost Your Business with SME IPO Funding Strategies – Enroll Now Under the previous law, a company appealing a tax assessment had to deposit 20% of the disputed tax amount before the appeal could be considered. In 2024, the government amended Section 112 of the CGST Act, reducing the pre-deposit requirement from 20% to 10% for appeals. However, the amendment would only take effect from November 1, 2024, and the GST Tribunal which is responsible for hearing appeals, had not been constituted yet by the government. Without the GST Tribunal in place, the petitioner could not file its appeal.

The petitioner challenged the GST Tribunal’s non-constitution and sought relief regarding tax payment and deposit conditions under the Central Goods and Services Tax (CGST) Act, 2017 before the Patna High Court. Boost Your Business with SME IPO Funding Strategies – Enroll Now The petitioner company requested the court to stay the recovery of the remaining tax amount until the tribunal was established and an appeal could be filed. The bench comprising Chief Justice of Patna High Court, K. Vinod Chandran, and Justice Partha Sarthy recognized that the GST Tribunal had not been constituted yet and that the amendment reducing the pre-deposit to 10% would only be effective from November 1, 2024. The petitioner could not be penalized for the government’s failure to constitute the tribunal.

The court relied on precedent from SAJ Food Products Pvt. Ltd. vs. The State of Bihar, which allowed a stay of recovery upon depositing a portion of the disputed tax until the tribunal was established. Boost Your Business with SME IPO Funding Strategies – Enroll Now Therefore, the court directed the petitioner to deposit 10% of the disputed tax amount. Upon this deposit, the recovery of the remaining tax would be stayed until the GST Tribunal is constituted. Once the tribunal is established, the petitioner must file an appeal following the necessary statutory requirements. The writ petitioner was disposed of with directions. To Read the full text of the Order CLICK HERE Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates