2025 (7) TMI 1607 - HC - GST

Appealable order - non-constitution of the GST Tribunal - prayer for stay of recovery proceedings till the filing of the appeal - petitioner has already deposited 10% of the tax amount and is ready to deposit 10% more of the remaining tax amount today itself - HELD THAT - In view of the above said circular issued by Government of India and undertaking of the petitioner to deposit 10% of the remaining tax amount as per requirement of Section 112(8) of the CGST Act present writ petition is disposed of. Since as per Para 5 of the circular dated 11.07.2024 on providing undertaking and on payment of an amount equal to the amount of pre-deposit as per the procedure mentioned in Para 4 of the aforementioned circular recovery of the remaining amount of confirmed demand as per the order of the appellate authority will stand stayed as per provisions of sub-section (9) of Section 112 of CGST Act no further directions are required to be issued by this Court. Writ petition is disposed of accordingly.

Summary

ISSUES:

Whether an order passed by the first appellate authority under the Goods and Services Tax Act, 2017 is appealable before the Goods and Services Tax Tribunal under Section 112 of the Central Goods and Services Tax Act, 2017.Whether recovery proceedings can be stayed when the GST Tribunal is not yet constituted and the taxpayer is unable to file an appeal under Section 112 of the CGST Act.Whether the guidelines issued by the Government of India vide Circular No. 224/18/2024-GST dated 11.07.2024 provide a mechanism for stay of recovery proceedings in the absence of the GST Tribunal.What is the procedural requirement for a taxpayer to avail stay of recovery proceedings under sub-section (9) of Section 112 of the CGST Act when the Tribunal is not operational.

RULINGS / HOLDINGS:

The order dated 10.02.2025 passed by the first appellate authority is appealable under Section 112 of the CGST Act before the GST Tribunal, but due to non-constitution of the GST Tribunal, the statutory remedy of appeal is presently unavailable.In the absence of the GST Tribunal, recovery proceedings are not automatically stayed; however, the Government of India's Circular No. 224/18/2024-GST clarifies that recovery shall be stayed if the taxpayer complies with the pre-deposit requirement and files an undertaking as per the circular.The taxpayer can make the pre-deposit payment equivalent to the amount prescribed under sub-section (8) of Section 112 of the CGST Act through the Electronic Liability Register (ELL) as per the procedure outlined in the circular, which will be adjusted against the confirmed demand.Upon payment of the pre-deposit and submission of an undertaking to file an appeal before the GST Tribunal once it becomes operational, the recovery of the remaining confirmed demand shall stand stayed under sub-section (9) of Section 112 of the CGST Act.

RATIONALE:

The Court applied the statutory framework of the Central Goods and Services Tax Act, 2017, particularly Sections 78 and 112, which govern recovery proceedings and appellate remedies respectively.The Government of India's Circular No. 224/18/2024-GST dated 11.07.2024 was relied upon to interpret the application of Section 112 in the unique circumstance of the GST Tribunal not being constituted, thereby creating a temporary procedural mechanism.The circular clarifies the apparent conflict where taxpayers are unable to file appeals and make pre-deposits under Section 112(8), which would normally stay recovery under Section 112(9), preventing undue hardship to taxpayers.The Court did not find it necessary to issue further directions beyond enforcing the circular's guidelines, as these adequately address the stay of recovery pending the constitution of the GST Tribunal.