M/S Balram Singh vs. The Union Of INDIA

Held

The Court held that the impugned assessment orders and demand notices dated January 22, 2021, passed by the Assistant Commissioner of State Tax, Saharsa Circle, were bad in law due to a violation of the principles of natural justice. The Court found that the petitioner was not afforded a fair opportunity of hearing and that the ex parte orders lacked sufficient reasoning to explain how the tax liability was determined. Consequently, the Court quashed and set aside the impugned orders. The Court directed the petitioner to deposit 20% of the demanded amount within eight weeks, without prejudice to the rights of the parties. The bank account(s) of the petitioner were ordered to be de-freezed immediately. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order with reasons. Coercive steps were prohibited during the pendency of the assessment, which was to be completed expeditiously, preferably within two months from the petitioner's appearance. The Court explicitly stated that it had not expressed any opinion on the merits of the case, leaving all issues open.

Facts

The petitioner, M/s Balram Singh Patori, through its proprietor Balram Singh, filed a writ petition challenging assessment orders dated January 22, 2021, and the demand order in Form DRC-07, both passed by the Assistant Commissioner of State Tax, Saharsa Circle. These orders pertained to the period October 2019 to March 2020 (FY 2019-20) and imposed a total liability of Rs. 56,17,860/-. The petitioner contended that the orders were ex parte, passed without sufficient opportunity for hearing, and without adequate reasoning. The revenue, through its counsel, agreed to a remand for fresh consideration of the case on merits, with no coercive steps to be taken against the petitioner during the pendency of the case.

Key Issues

1. Whether the ex parte assessment orders and demand notices dated January 22, 2021, passed by the Assistant Commissioner of State Tax, Saharsa Circle, for the period October 2019 to March 2020, are liable to be quashed on the grounds of violation of principles of natural justice, specifically the lack of a fair opportunity of hearing and the absence of sufficient reasoning? Petitioner's Contention: The petitioner argued that the assessment orders were passed ex parte without affording sufficient time to represent their case and that the orders lacked adequate reasoning to justify the determined tax liability. They relied on the principle that orders with civil consequences must adhere to natural justice. Revenue's Contention: The revenue, through its counsel, stated that it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits. The revenue did not present arguments against the petitioner's claims regarding procedural irregularities.