M/S. Satyam Traders vs. The Union Of INDIA

Held

The Court held that the ex parte assessment orders dated 06.02.2021, passed by the Assistant Commissioner of State Tax, Saharsa Circle, Saharsa, were bad in law. The Court found two primary reasons for this conclusion: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing afforded to the petitioner, and (b) the ex parte nature of the order, which did not provide sufficient reasons for determining the amount due and payable by the assessee. The Court emphasized that orders passed in violation of natural justice, entailing civil consequences, are liable to be set aside. Consequently, the Court quashed and set aside the impugned assessment orders and the DRC-07 demand. 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 accounts of the petitioner were ordered to be de-frozen. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all concerned, and passing a speaking order with reasons within two months of 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. Satyam Traders, filed a writ petition challenging ex parte assessment orders dated 06.02.2021, passed by the Assistant Commissioner of State Tax, Saharsa Circle, Saharsa. These orders imposed a total liability of Rs. 47,88,092/- for the Financial Year 2019-20, comprising CGST and SGST, along with interest and penalties. The petitioner also challenged the demand order in Form DRC-07 for the same period. The petitioner sought to quash these orders, direct the refund of approximately Rs. 24,00,000/- seized from their cash credit ledger, and for a fresh assessment order considering their filed GSTR-9. The revenue, through its counsel, had no objection to the matter being remanded to the Assessing Authority for a fresh decision 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 dated 06.02.2021, passed by the Assistant Commissioner of State Tax, Saharsa Circle, Saharsa, for the Financial Year 2019-20, imposing a total liability of Rs. 47,88,092/- are liable to be quashed on grounds of violation of principles of natural justice and lack of reasoned decision-making. Petitioner's contentions: The petitioner argued that the assessment orders were passed ex parte, in violation of the principles of natural justice, as they were not afforded a fair opportunity of hearing. They also contended that the orders lacked sufficient reasoning to justify the determined tax liability and were passed without considering the GSTR-9 filed by the petitioner and the supporting materials uploaded on the GST portal. The petitioner sought a fresh assessment order considering all relevant records. Revenue's contentions: The Revenue, through its counsel, stated that it had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.