Rajasthan High Court Grants Protection from GST Recovery Proceedings Pending Constitution of GST Tribunal

Case Overview

Case Name: World Trade Park Ltd. Vs Union of India
Court: Rajasthan High Court
Key Legislation: Rajasthan Goods and Services Tax Act, 2017

In a significant ruling that continues to reinforce the judicial consensus on the non-functionality of the GST Appellate Tribunal, the Rajasthan High Court disposed of a writ petition filed by World Trade Park Ltd. against the Union of India, granting interim protection from recovery proceedings. The Court's direction was consistent with its earlier established position — that assessees cannot be penalised for failing to pursue a statutory appellate remedy when the very forum meant to hear such appeals has not yet been constituted.

Background and Context

The central difficulty faced by World Trade Park Ltd. — like many other assessees across Rajasthan — was procedural in nature rather than substantive. Having received an adverse order from the First Appellate Authority, the assessee's logical next step under the GST framework would have been to approach the Goods and Services Tax Appellate Tribunal (GSTAT). However, as has been widely acknowledged in judicial proceedings across the country, the GSTAT had simply not been constituted at the time of filing the writ petition.

This left the assessee in an unenviable legal limbo: bound by the First Appellate Authority's order, unable to challenge it before the designated statutory forum, and simultaneously exposed to coercive recovery proceedings by the revenue department for the balance tax demand.

The assessee therefore approached the Rajasthan High Court by way of a writ petition, seeking protection from such recovery proceedings until the Tribunal became operational and the statutory appeal could be filed.

Before examining the Court's ruling, it is essential to understand the provision upon which the entire relief framework rests.

Section 112(8) of the Rajasthan Goods and Services Tax Act, 2017 provides that where an assessee intends to file an appeal before the GST Appellate Tribunal, they may be required to deposit a specified percentage of the disputed tax demand. Upon making such a deposit, the recovery of the remaining balance amount is stayed pending the outcome of the appeal.

Key Principle: Section 112(8) essentially creates a conditional stay on recovery — the assessee deposits a portion of the demand, and the revenue refrains from pursuing the remaining balance during the pendency of the appeal.

This provision, read in conjunction with the practical reality of a non-functional Tribunal, formed the cornerstone of the Rajasthan High Court's consistent approach in such matters.

Precedent Relied Upon: Jagdamba Motors vs. Union of India & Ors.

The parties before the Court were in agreement — a position described in legal parlance as being ad idem — that the question raised in the present writ petition was squarely covered by the Division Bench judgment of the Rajasthan High Court dated 27.11.2024, rendered in: