M/S Shyam Indus Power Solutions Private Limited vs. The Union Of INDIA

Facts

The petitioner, M/s Shyam Indus Power Solutions Private Limited, filed a writ petition before the Patna High Court challenging three orders: an order dated 02.06.2022 by the Additional Commissioner of State Tax (Appeal), Tirhut Division, Muzaffarpur; an order dated 07.12.2020 by the Joint Commissioner of State Tax, West Circle, Muzaffarpur; and a summary of order in Form GST DRC-07 dated 08.01.2021. These orders pertain to the tax period 2018-19. The petitioner sought to quash these orders. The Revenue, through its counsel, agreed to a remand of the matter 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.

Held

The Court held that it was not precluded from interfering with the orders despite the statutory remedy, as the orders appeared to be bad in law. The Court identified two primary reasons for interference: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner; and (b) the ex parte nature of the orders, which failed to provide sufficient reasons for determining the amount due and payable by the assessee. The Court found that the authorities had not adjudicated the matter on the attending facts and circumstances, and that all issues of fact and law should have been dealt with. Consequently, the Court quashed and set aside the impugned orders. The Court directed the petitioner to deposit ten percent of the total amount of the demand within four weeks, in addition to any amount already deposited as a prerequisite for hearing the appeal. The Court also ordered the de-freezing of the petitioner's bank accounts and directed the Assessing Authority to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and dealing with all materials, including the applicability of Section 16(2) of the BGST Act. The Assessing Authority was directed to pass a speaking order within two months of the petitioner's appearance.

Key Issues

1. Whether the impugned orders 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 insufficient time afforded to the petitioner to represent its case? 2. Whether the ex parte orders passed by the authorities are legally sustainable, given that they allegedly do not assign sufficient reasons for determining the amount due and payable by the assessee and fail to adjudicate on the attending facts and circumstances? Petitioner's Arguments: The petitioner contended that the impugned orders were passed in violation of the principles of natural justice, as they were not afforded a fair opportunity of hearing and sufficient time to present their case. They also argued that the orders were passed ex parte without adequate reasoning to justify the demand. Revenue's Arguments: The Revenue stated that they 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.