Power to Grant Interim Relief: Enlivening GST Appellate Tribunal

No express statutory power, however, appears to have been conferred upon the GSTAT to address any eventuality by way of grant of interim relief during the pendency of the appeal before it.

In the year 2017 the indirect tax regime of India underwent a massive transformation with the goods and services tax (GST) legislations replacing the bulk of indirect tax laws. Besides providing a uniform legislative paradigm for the levy and collection of the tax across the country, even qua the dispute settlement system, the GST legislations envisage an Appellate Tribunal with Nation-wide jurisdiction to adjudicate and determine the correctness of the orders passed by the Central and State Appellate Authorities and Revisional Authorities under the GST legislations.¹

The GST legislations encapsulate the legislative framework and enumerate the powers and procedures of the GST Appellate Tribunal (GSTAT).² One of the aspects clearly set out in the law is the requirement of mandatory pre-deposit wherein an aggrieved taxpayer is obliged to compulsorily deposit a part of the demand being contested along with the appeal before the GSTAT.³ The statute provides that upon payment of such amount, “the recovery proceedings for the balance amount shall be deemed to be stayed till the disposal of the appeal” by the GSTAT.⁴ No express statutory power, however, appears to have been conferred upon the GSTAT to address any eventuality by way of grant of interim relief during the pendency of the appeal before it.

The consequences of such legislative omission to provide for a mechanism for interim relief are significant. Addressing this aspect, in a recent decision, the Bombay High Court has examined the statutory framework to declare that notwithstanding the absence of a specific power enabling the GSTAT to grant interim relief, the statutory scheme and the general trappings of tribunals exhibit that the GSTAT also has the power to grant interim relief.

In Hongkong and Shanghai Banking Corpn. Ltd. v. State of Maharashtra⁵, the Bombay High Court came across a situation wherein the taxpayer had duly filed an appeal before the GSTAT and yet recovery proceedings were initiated against the taxpayer. Being of the view that the GSTAT was not clothed with statutory powers to grant interim relief against such recovery action, the taxpayer approached the High Court by invoking its extraordinary writ jurisdiction. The High Court tried the question as a preliminary issue whether GSTAT has powers to grant interim relief and answered in the affirmative. Declaring that there appears to be an implicit statutory sanction available to the GSTAT to grant interim relief in appropriate cases, the High Court exposited the following reasons for its conclusion:

1. The statutory provision which confers appellate powers upon the GSTAT permits it to “pass such orders thereon as it thinks fit”,⁶ which perforce includes the “jurisdiction to pass appropriate interim orders”.

2. “The power to grant interim relief, including protection against recovery pending the appeal, is inherent and incidental to the appellate jurisdiction conferred upon the Tribunal. Thus, the appellate power of the Tribunal being wide in its sweep, necessarily wields with the Appellate Tribunal, the authority and jurisdiction to pass appropriate interim orders relevant to subject-matter of the appeal, so as to make the appellate remedy effective.”

3. The proposition that GSTAT is a statutory forum created by law to determine appeals and yet “powerless to grant interim relief” is to be rejected because such “interpretation would render the appellate remedy illusory and defeat the legislative intent, cumulatively and wholesomely” qua the GSTAT. In fact, such a proposition implies “that although the GSTAT would have powers to set aside the order impugned before it, the interim relief authority would be vested with the High Court in the proceedings under Article 226 of the Constitution. This can never be the legislative intent, that the High Court should function as a forum for grant of interim relief, in matters squarely falling within the appellate jurisdiction of the Tribunal. This is inconceivable”.

4. The procedural rules also indicate that the GSTAT has been equipped with “inherent powers”⁷ and specific provisions have been carved out to address interim relief applications.⁸

5. Jurisprudentially, inherent powers of tribunals to grant interim relief have been recognised even in absence of express statutory provisions on the premise that “such power must be regarded as incidental and necessary to its appellate jurisdiction”.⁹

The High Court, thus, has declared that the entirety of appellate proceedings, including the interim facets of it, shall be subject to the exclusive determination of the GSTAT and the taxpayer is not left remediless for any eventuality but can seek appropriate relief from the GSTAT itself without need to take recourse of writ jurisdiction of the High Court.

At the outset it is questionable as to how Revenue proceeded to initiate recovery proceedings despite a statutory prescription which forced the taxpayer to seek judicial remedies. That aspect has not been addressed by the High Court. Thus, one shall have to await further judicial elocution of the legal position interfacing such statutory mandate. Having said that, what the High Court has actually decided is crucial for GST dispute resolution system. Some of the decision’s various facets, each of which requires a distinct appreciation, are discussed below:

1. Emphasis by the High Court that the statutory scheme must be construed to address the appellate proceedings “cumulatively and wholesomely” by one single forum exemplifies the status of GSTAT as a functional forum exercising statutory powers to holistically address the entirety of appeal process under the GST laws. The declaration avoids the GSTAT from being handicapped by excluding or limiting its jurisdiction and, instead, enlivens it to position itself as a comprehensive dispute settlement forum. The decision ensures that the jurisdiction to address all allied and ancillary aspects conjoined with appellate proceedings are exclusively vested in the GSTAT, thereby reaffirming its unique status as the final arbiter of all GST matters,¹⁰ subject only to limited appellate review by the High Courts or the Supreme Court.¹¹

2. Even though the decision is in context of interim stay, the fact that the decision reaffirms the inherent and incidental powers of the GSTAT, it has significant bearing for other aspects which are likely to play out before GSTAT. Besides stay of recovery, there can be many situations requiring interim arrangements; for illustration, provisional release of detained/seized goods, disposal of perishable goods, direction against encashment of bond/bank guarantee, etc. are requests for indulgence by the taxpayers which can be vividly conceived as arising before GSTAT and, in substance, operate on similar plane as interim stay. By the principle of parity, therefore, applying the decision of the High Court, the jurisdiction to determine such applications should similarly be within the remit of the GSTAT.

3. The decision also insulates against the dichotomy — an aspect which the High Court has itself pointed — that while the final determination shall be of the GSTAT, the interim determination perforce would be the High Court in the event it is agreed that the GSTAT does not have the power to grant interim relief. In such an eventuality, parallel proceedings would have ensured before multiple forums, one for final relief before GSTAT and before other forums for interim relief. In a sense, the arrangement carved out by the High Court is aligned with the declaration of the Supreme Court in the context of other economic legislations wherein by judicial fiat it is directed that appellate procedure qua interlocutory relief shall adopt the statutorily proscribed procedure qua final determination.¹²

4. At a larger level, the decision of the High Court also ensures that the harmonisation exercise undertaken by the GST laws by providing for a uniform framework for recovery of taxes is maintained even in the appellate stages and the taxpayer-friendly regime is not diluted at the GSTAT stage.

5. More critically, from a pragmatic perspective, the taxpayer concerned is saved from the vagaries of approaching multiple forums against a determination by the appellate authority by filing a single consolidated appeal for final relief and interim relief before the GSTAT. A contrary view would have obliged the taxpayer to devote time and costs in pursing multiple proceedings against the determination of the appellate authority; a clear instance of unavoidable litigation. Furthermore, being seized of the appeal itself, GSTAT is in any case better suited in considering the overall factual perspective to determine the terms and conditions, if any, for granting interim relief vis-à-vis the High Court which would have limited perspective while considering the proceedings under its writ jurisdiction.

6. It is notable that the statutory regime of GSTAT institutes it as a unified national Appellate Tribunal for all GST matters. Furthermore, it is now well-settled that even an order of the Appellate Tribunal carries precedential value and is binding on the lower authorities.¹³ Thus, with the GSTAT being vested with interim relief jurisdiction, a consistent and uniform jurisprudence is likely to emerge qua situations deserving interim relief and conditions to be imposed, etc. which may have been a far cry in discretionary writ jurisdiction and with different High Courts possibly taking different positions. Thus, the consolidation of interim relief jurisdiction at the GSTAT is likely to stabilise the practice and procedure across the country and even aid the tax administration in evolution of suitable guidelines towards evolving a frictionless taxpayer interface.

7. Last, but not the least, while the decision reindorses the well understood jurisprudential exposition — that all forums have implied and inherent powers — this aspect of the decision is nonetheless relevant because: 1) it fills a legislative vacuum by recognising that notwithstanding lack of a specific legislative provision the GSTAT shall be invested with such powers; and 2) by stressing upon the inherent powers of GSTAT, the decision permits it to evolve its own practice and procedure to address such eventualities which are fairly routine in dispute settlement system.

In view of the decision, the GSTAT is now expressly empowered (without requiring to examine whether it has jurisdiction to do so) to pass suitable interim orders towards ensuring that the pending of the final determination is not derailed by precipitate recovery measures sought to be enforced against the taxpayer. It is noteworthy that the High Court has not directed a time-bound determination of the interim applications by the GSTAT. Even though the statute stipulates that the GSTAT “shall have power to regulate its own procedure”,¹⁴ the GSTAT procedural rules are also silent as regards the time-frame within which interim applications can be disposed. Hopefully the GSTAT would be cognizant of the urgency of such cause and address it conclusively in an expedited setting. Perhaps the taxpayers can take solace under the settled legal proposition that once such an application for interim relief has been filed and remains pending before a tribunal, recovery measures cannot be initiated during the pendency of such application.¹⁵

In any case, it is heartening to note that this clarity — as regards the appropriate forum for interim relief — has arrived at an early stage considering that the operationalisation of GSTAT is at its infancy. The decision of the Bombay High Court is a significant development and taxpayer-friendly declaration, which appears to be in line with the spirit of the GST laws, besides providing a pragmatic framework for adjudication of appeals by the GSTAT. One would hope that the Revenue accepts this decision of the Bombay High Court without subjecting the proposition to further litigation in order to stabilise the GST dispute settlement system at the earliest.