M/S Friends Mobile vs. The Uniojn Of INDIA

Held

The High Court quashed and set aside the impugned order dated 01.08.2022 of the Additional Commissioner of State Tax (Appeal) and the order dated 17.12.2021 of the Assistant Commissioner of State Tax, including the summary of order in Form GST DRC-07. The Court found the appellate order to be bad in law due to the violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the original order without sufficient reasoning. The Court also noted that the authorities had not adjudicated the matter on the attending facts and circumstances. The Court accepted the petitioner's undertaking to deposit ten percent of the total amount, if not already done, before the next date, and an additional ten percent of the demand within four weeks. These deposits are without prejudice to the rights of the parties and subject to the final order. The Court directed de-freezing of the petitioner's bank accounts. 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 within two months of the petitioner's appearance. No coercive steps are to be taken 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 Friends Mobile, filed a writ petition challenging an order dated 01.08.2022 passed by the Additional Commissioner of State Tax (Appeal), Patna, which rejected their appeal against an order dated 17.12.2021 passed by the Assistant Commissioner of State Tax. The appeal was rejected solely on the ground of limitation. The earlier order dated 17.12.2021, passed under Section 73(9) of the BGST Act, 2017, and summarized in Form GST DRC-07, was also challenged. The revenue, through its counsel, stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, without the limitation period being an impediment, and that no coercive steps would be taken against the petitioner during the pendency of the case. The High Court noted that the impugned order was passed ex parte and in violation of principles of natural justice.

Key Issues

1. Whether the order passed by the appellate authority rejecting the petitioner's appeal on the ground of limitation, without considering the merits, is bad in law, particularly in light of the alleged violation of principles of natural justice and the ex parte nature of the original assessment order? Petitioner's contention: The petitioner argued that the appellate authority's order was bad in law as it was passed without affording a fair opportunity of hearing and that the original assessment order was passed ex parte without sufficient reasons. They contended that the authorities failed to adjudicate the matter on the attending facts and circumstances. Revenue's contention: The counsel for the Revenue stated they had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, with the limitation period not being an impediment, and that no coercive steps would be taken against the petitioner. The Revenue did not contest the petitioner's claims regarding procedural infirmities.