MARCH 11, 2026

Can Tribunal Stay? The Interim Interlude

By Vijay Kumar

THE Hongkong and Shanghai Banking Corporation is before the Bombay High Court in writ petition under Article 226 of the Constitution with an interesting issue

Can the Goods and Services Tax Appellate Tribunal (GSTAT) pass interim orders?

An Order-in-Original under GST against the Banking Corporation on 18th December 2023 confirmed tax liability. The Bank appealed before the Appellate Authority who rejected their Appeal.

They filed an Appeal before the GST Appellate Tribunal on 5th February 2026. If an appeal is filed before the Tribunal and pre-deposit is paid, further demand is deemed to be stayed.

But they received intimations by e-mails dated 3rd February 2026 and 6th February 2026 raising a demand. They informed the Department that the demand amount has been deposited and that an Appeal against the Order-in-Appeal is pending before the Tribunal.

It is their contention that notwithstanding that, a Recovery Notice dated 6th February 2026 has been issued to them and steps are sought to be taken to implement the same.

And they are before the High Court contending that although their appeal is pending before the Tribunal, coercive recovery proceedings ought not to be continued. - 2026-TIOL-375-HC-MUM-GST

The Petition, seeks the following substantive reliefs:

a. quashing and setting aside the Impugned Intimation dated 03.02.2026 and the Impugned Recovery Notice dated 06.02.2026;

b. stay the operation and effect of the Impugned Intimation Notice dated 03.02.2026 and the Impugned Recovery Notice dated 06.02.2026;

At the outset, the counsel for the Revenue, submitted that:

1. Once the Appeal is pending before the Tribunal, the Petitioner ought to have approached the Tribunal seeking appropriate interim reliefs.

2. The Petitioner has an efficacious alternative remedy of moving the Tribunal for grant of stay.

The counsel for the Petitioner submitted that:

1. There is no provision either under the CGST Act or the Rules framed thereunder empowering the Tribunal to grant an interim order staying recovery proceedings.

2. It was therefore contended that they had no efficacious alternative remedy and was constrained to approach the High Court under Article 226 of the Constitution.

Thus, the issue is whether the Tribunal is empowered to pass interim orders.

Section 113(1) of the GST Act provides that the Appellate Tribunal may, after giving the parties an opportunity of being heard, pass such orders as it thinks fit confirming, modifying or annulling the decision or order appealed against, or may refer the case back to the Appellate Authority, the Revisional Authority or the original Adjudicating Authority with such directions as it may think fit for a fresh adjudication or decision.

The High Court observed:

Considering the nature of the powers conferred under sub-section (1) of Section 113 to pass such orders "as it thinks fit", in our opinion, it cannot be inferred, that although the Tribunal is vested with the jurisdiction to pass substantive final orders on the Appeal to confirm, modify or annul the decision or order appealed against, or may refer the case back to the Appellate Authority or the Revisional Adjudicating Authority with appropriate directions as it may think fit, for a fresh adjudication or decision in the manner as provided in sub-section (1) of Section 113, it would nonetheless lack jurisdiction to pass appropriate interim orders.

The power to grant interim relief, including protection against recovery, 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.

We are unable to accept a proposition that although the Appellate Tribunal is a statutory forum created under the scheme of Sections 111, 112 and 113 of the CGST Act, 2017, it would nevertheless be powerless to grant interim relief. Such an interpretation would render the appellate remedy illusory and defeat the legislative intent surrounding the constitution of the Appellate Tribunal.

The consequence of what is urged before the High Court:

Although the Appellate Tribunal 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.

The High Court found that 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.

The High Court referred to the "Goods and Services Tax Appellate Tribunal (Procedure) Rules, 2025", under which the following Rules would make the position crystal clear, insofar as the powers of the Tribunal in passing interim orders are concerned:

10. Inherent powers. - Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Appellate Tribunal to make such orders or give such directions as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal.

29. Interlocutory applications. - Every interlocutory application for stay, direction, rectification in order, condonation of delay, early hearing, exemption from production of copy of order appealed against or extension of time prayed for in pending matters shall include all the information as per the prescribed GSTAT FORM-01 and the requirements prescribed in that behalf shall be complied with by the applicant, besides filing an affidavit supporting the application.

49. Procedure for filing of and disposal of interlocutory application. - The provisions of the rules regarding the filing of interlocutory applications shall, in so far as may be, apply mutatis mutandis to the filing of applications under this rule.

59. Registers to be maintained. -The following Registers shall be maintained online/offline and posted on a day-to-day basis by such ministerial officer or officer of the Registry may, subject to any order of the President -

(c) register of interlocutory applications (GSTAT CDR -05)

In a similar context in Income Tax Officer, Cannanore vs. M. K. Mohammed Kunhi - 2002-TIOL-122-SC-IT-LB, the Supreme Court was dealing with the question, as to whether the Income Tax Appellate Tribunal had the power, under the provisions of the Income Tax Act, 1961 to stay the recovery of the realization of the penalty imposed by the departmental authorities on an assessee during the pendency of an appeal filed before it.

The Supreme Court, interpreting Section 254 of the Income Tax Act being a provision quite similar to Section 113 of the CGST Act, held that although there was no express provision conferring upon the Appellate Tribunal the power to stay recovery of tax or penalty during the pendency of an appeal, such power must be regarded as incidental and necessary to its appellate jurisdiction. The Supreme Court held that when Section 254(1) confers wide appellate powers upon the Tribunal to pass such orders "as it thinks fit," it impliedly grants all powers necessary to make the exercise of such appellate jurisdiction effective.

So, the High Court was not inclined to accept the Petitioner's contention that the Tribunal lacks jurisdiction to grant interim reliefs of the nature sought.

Considering that the Petitioner has approached this Court urgently in view of the Recovery Notice dated 6th February 2026, the High Court deemed it appropriate and in the interests of justice, to grant limited interim protection to the petitioner, so as to enable the Petitioner to approach the Appellate Tribunal.

Accordingly, the Petitioner is at liberty to file an interim application before the Appellate Tribunal within a period of two weeks. Till such interim application is filed and decided by the Tribunal, the Recovery Notice dated 6th February 2026 shall not be acted upon by the Respondents.

What if there is no provision to file interim application for stay?

The High Court was informed that the electronic portal does not provide for filing of an interim application.

If that be so, the Court permitted the Petitioner to file the interim application manually. It also direct that the Registry of the Tribunal makes an appropriate provision on the portal to enable filing of such interim applications.

When portals lock their gates, justice must sneak in through paper. Can bureaucracy be defeated by stationery?

As per Section 112(9), where the pre-deposit as required under Section 112(8) is paid, the recovery proceedings for the balance amount shall be deemed to be stayed till the disposal of the appeal. The law says deemed stay, the Department hears deemed prey .

In spite of Section 112(9) clearly stipulating that the balance is deemed to be stayed, the Department still lunges forward with recovery-an arrogance so dense it bends statutory light. The taxpayer is left asking not only "can the Tribunal grant stay?" but "can the Tribunal itself stay" -stand, endure, and not collapse under the weight of such defiance.

Unless these totally illegal recoveries after a deemed stay are nipped in the bud, the Tribunal will mutate into a "Stay Tribunal"-forced to spend its time staying the Department rather than deciding appeals.

Can CESTAT stay?

In a strange case recently, the Chennai Bench of the CESTAT in Commissioner of Customs v SKOT India - 2025-TIOL-1278-CESTAT-MAD held that it had the power to stay an order of the appellate authority dropping demand of duty. The Tribunal referred to the very same order of the Supreme Court above and observed,

The power of taxation including its collection being an inherent attribute of sovereignty, the right of revenue to seek a stay of an order detrimental to the collection of taxes, cannot be lightly dismissed.

In any case such a power is inherent in the powers of the Tribunal.

The Revenue got the right to apply for Stay, but did it get stay?

The Tribunal held:

Hence merely stating the probability of revenue succeeding in their appeal, is a bald statement which cannot be stated to be a reasonable plea and is just not enough.

Some more homework needs to be done by revenue if such applications are to succeed and are not seen to be filed as a mere formality.

Hence on balance it is felt that revenue has not made out a case for stay of the impugned order.

And when Revenue tried its luck before CESTAT, it discovered that probability is not a plea. The right to apply for stay was granted, but the stay itself was denied - proof that even sovereignty needs homework before it can pass the test.