Courts staying GST demands till tribunal is set up
Mumbai, May 27, 2023
Courts are increasingly giving relief to taxpayers by staying GST demands, pending formation of the GST Tribunal that would provide a forum to file appeals.
The Calcutta high court’s divisional bench recently stayed recovery proceedings and modified the order of a single judge bench which had a condition to grant a stay on the demand: payment of 20% of the disputed tax.
Under GST provisions, a taxpayer aggrieved by the order passed by the first appellate authority, is entitled to file an appeal with the GST Tribunal. However, this tribunal is yet to be set up. This results in taxpayers having to file writ appeals with the high courts to seek relief.
Ankit Kanodia, advocate who represented the taxpayer — Jai Venktesh Concast — before the Calcutta HC told TOI, “This judgment will help all taxpayers who are facing notices from tax authorities for recovery of the confirmed demand, after the order of the first appellate authority. We have seen recovery notices being sent after expiry of three months of the appellate order and the payment is also being debited from the electronic credit ledger, subject to availability of balance. This is done on the ground that there is no stay of demand from any higher forum. This harsh action of the department will be stayed by the present judgment, giving relief till the formation of the GST Tribunal.”
The judges relied on an earlier order of the Bombay HC in the case of Rochem India. The chairman of the Central Board of Indirect Taxes and Customs (CBIC) had in an affidavit to the high court indicated that no hardship would be caused to taxpayers because of the non-constitution of the GST Tribunal.
A CBIC circular dated March 18, 2020 also clarified that an appeal to the GST Tribunal can be made within three months (six months in case the appeal is being filed by the government) from the date of the order sought to be appealed against, or the date on which the president or state president of the GST Tribunal enters office (whichever is later).
In the case of Gulf Oil Lubricants, the Bombay HC has directed GST authorities that all orders passed by them, which can be appealed at the tribunal level, should stipulate that the taxpayer can file a declaration of its intention to file an appeal. Once such a declaration is filed, no GST demand recovery should be initiated.
[The Times of India]
