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Bombay HC stays implementation of orders appealable to GSTAT till its constitution
This Tax Alert summarizes a recent ruling[1] of the Bombay High Court (HC) staying the implementation of orders appealable to Goods and Services Tax Appellate Tribunal (GSTAT) until the constitution of such Tribunal.
As per Section 112 of the Central Goods and Services Tax Act, 2017 (CGST Act), the orders passed by the appellate or revisional authority are appealable to GSTAT. However, GSTAT has not been constituted in view of the Madras HC judgement[2] wherein vires of Section 109 and 110, relating to the constitution of GSTAT and the qualification, appointment and conditions of service of its members, were challenged.
Consequently, the limitation period for filing appeal to the GSTAT was extended vide Removal of Difficulty Order[3] basis which the appeal can be filed within three months (six months in case of appeal by Government) after constitution of the Tribunal. A Circular[4] was also issued in this regard.
Various writ petitions were filed before the Bombay HC against the orders passed by the appellate authority on the ground that GSTAT is yet to be constituted.
On perusing the above Circular, HC observed that Government does not intend to prejudice taxpayers for the want of Tribunal and therefore, it extended the period of limitation. As a corollary, it follows that the appealable orders to GSTAT would not be implemented until the Tribunal becomes functional. That being the position, the writ petitions do not need to remain pending in the HC.
Accordingly, HC disposed of writ petitions holding that the impugned orders will not be given effect until two weeks, after the period prescribed for filing an appeal as per the Circular, are over.
Comments
On plain reading of the Removal of Difficulty Order and the Circular, it appears that only the time limit for filing appeal before the GSTAT was extended. However, orders passed by the appellate authority could still be implemented in absence of any mechanism under the GST law to stay such orders till the constitution of GSTAT.
Accordingly, Revenue in many cases proceeded with recovery of disputed amount in case of unfavorable order passed by the appellate authority, although the same was appealable to the GSTAT.
Basis this ruling, recovery of the amount in the above scenarios may be stayed since HC has suspended the implementation of such orders.