M/S Suraj Kumar vs. The Union Of INDIA

Held

The Court held that the impugned orders were bad in law for two primary reasons: (a) violation of the principles of natural justice, as the petitioner was not afforded a fair opportunity of hearing and insufficient time was given to present their case; and (b) the orders were passed ex parte without assigning sufficient reasons to decipher how the amount due was determined. The Court found that the authorities had not adjudicated the matter on the attending facts and circumstances, and all issues of fact and law ought to have been dealt with, even in ex parte proceedings. Consequently, the Court quashed and set aside the three impugned orders. The Court also directed the petitioner to deposit ten percent of the total amount (if not already deposited) and an additional ten percent of the demand raised before the Assessing Officer within four weeks, without prejudice to the rights of the parties. Bank accounts were 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 within two months of the petitioner's appearance. No coercive steps were to be taken against the petitioner during this period. 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 Suraj Kumar, sought to quash three orders: an order dated 24.07.2021 by the Joint Commissioner, State Tax, Patna; a summary of order in Form GST DRC-07 dated 08.12.2021 by the Assistant Commissioner of State Tax, Patna; and an order dated 13.10.2022 by the Additional Commissioner of State Taxes (Appeals), Patna, which dismissed the petitioner's appeal on grounds of limitation. The petitioner contended that both the initial orders and the appellate order were ex parte. The High Court noted that the delay in the appeal was sufficiently explained by COVID-19 restrictions. The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps taken against the petitioner during pendency.

Key Issues

1. Whether the impugned orders, passed ex parte, violated the principles of natural justice by not affording a fair opportunity of hearing to the petitioner and by failing to provide sufficient reasons for determining the amount due? The petitioner argued that the orders were bad in law due to the violation of principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the proceedings. They contended that insufficient time was given to represent their case and that the orders lacked discernible reasons for calculating the demand. The petitioner also highlighted that the appellate order was dismissed solely on the ground of limitation, without considering the merits. The Revenue, represented by the Additional Solicitor General and Senior Standing Counsel, stated they had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, subject to certain conditions.