Patna High Court Offers Reprieve: Stays Tax Recovery despite Dismissal of Appeal

Patna High Court Offers Reprieve: Stays Tax Recovery despite Dismissal of Appeal

The Patna High Court recently declined a petitioner's plea to invoke jurisdiction under Article 226 of the Constitution. This decision was based on the rejection of an appeal against an assessment order on factual grounds. Nevertheless, the Court recognised a significant aspect regarding the petitioner's access to the statutory recourse provided by Sub-Section (8) and Sub-Section (9) of Section 112 within the Bihar Goods and Services Tax Act (BGST Act) was obstructed due to the absence of the Appellate Tribunal, which had not been constituted.

Despite the dismissal of the original appeal, the Court showed leniency by granting the petitioner the privilege of a stay on the recovery tax.

In summary, the petitioner was discontented due to an error made by the Executive Engineer, Road Division, which led to the petitioner being wrongly held liable. The assessment was founded on deductions made by the Executive Engineer, which the petitioner believed were inaccurately assigned to them. The petitioner argued that these deductions should rightfully pertain to a distinct entity called Dayanand Prasad Sinha and Company.

The Division Bench comprising Chief Justice K. Vinod Chandran and Justice Partha Sarthy observed that the petitioner had contested the assessment order by filing an appeal, but the appeal was later rejected. The petitioner had put forth a precise argument that deductions meant for a different entity were wrongly associated with them and were erroneously included in their records. However, the Tribunal dismissed this argument, highlighting the absence of any supportive evidence to validate the petitioner's assertion.

The Bench clarified that even though it could not take action under Article 226 due to the factual dismissal, the petitioner had a legal recourse available through an appeal under Section 112 of the BGST Act. Nevertheless, the Bench acknowledged that the petitioner's ability to use this legal option was hampered by the absence of the Appellate Tribunal, which had not been established.

Consequently, the Bench resolved to conclude the writ petition with a stipulation: upon submitting an amount equivalent to 20 per cent of the unresolved disputed tax, the petitioner would be eligible for the legal advantage of a stay, as per Sub-Section (9) of Section 112. This decision was taken to guarantee that the petitioner would not be deprived of their entitled benefits due to the absence of the Tribunal. The Bench directed that the recovery of the remaining sum be put on hold, encompassing any connected measures that might have been initiated.