M/S Sr Electricals vs. The Union Of INDIA

Held

The Court held that the impugned order dated 09.09.2021, rejecting the petitioner's appeal ex parte, was bad in law on multiple grounds. Firstly, it violated the principles of natural justice by not affording the petitioner a fair opportunity of hearing and sufficient time to present their case. Secondly, the ex parte order lacked sufficient reasoning to justify the determination of the amount due and payable by the assessee. Thirdly, the authorities failed to adjudicate the matter based on the attending facts and circumstances, neglecting to deal with all issues of fact and law, even in ex parte proceedings. Consequently, the Court quashed and set aside the impugned order dated 09.09.2021 and the order dated 16.12.2019 passed by the Assistant Commissioner. The Court directed the petitioner to deposit an additional 10% of the demand within four weeks, without prejudice to their rights. Bank accounts were to be de-frozen immediately. The petitioner was directed to appear before the Assessing Authority on 02.11.2022, and the Assessing Authority was directed to decide the case on merits after complying with principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order within two months. No coercive steps were to be taken during this period. The Court explicitly stated that no opinion was expressed on the merits of the case, and all issues were left open.

Facts

The petitioner, M/s SR Electricals, filed a writ petition challenging an order dated 09.09.2021 passed by the Additional Commissioner State Tax (Appeals), Bhagalpur Division. This order rejected the petitioner's appeal against an order dated 16.12.2019 passed by the Assistant Commissioner of State Tax, Bhagalpur Circle, under Section 62 of the CGST Act, 2017. The appeal was rejected ex parte. The revenue, through its counsel, agreed to a remand for fresh decision by the Assessing Authority, stating that limitation would not be an impediment and the case would be decided on merits, with no coercive steps during pendency. The petitioner stated that 10% of the total amount, a prerequisite for appeal hearing, had been deposited.

Key Issues

1. Whether the impugned order dated 09.09.2021, rejecting the petitioner's appeal ex parte, is bad in law due to violation of principles of natural justice and lack of sufficient reasons? (Question of law) Petitioner's arguments: The petitioner contended that the ex parte rejection of their appeal by the Additional Commissioner State Tax (Appeals) was a violation of the principles of natural justice, as they were not afforded a fair opportunity of hearing and sufficient time to represent their case. They also argued that the order lacked sufficient reasoning to determine the amount due. The petitioner stated that they had already deposited 10% of the total demand as a prerequisite for the appeal hearing. Revenue's arguments: The Revenue stated that they had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, and that the limitation period would not be a bar. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.