M/S Shyam Indus Power Solutions Private Limited vs. The Union Of INDIA
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M/s Shyam Indus Power Solutions Private Limited (Petitioner) filed a writ petition before the Patna High Court challenging orders passed by the Additional Commissioner of State Tax (Appeal), Joint Commissioner of State Tax, and a summary of order in Form GST DRC-07. These orders were ex parte and allegedly passed without sufficient opportunity for the petitioner to present their case. The Revenue, represented by learned counsel, agreed to a remand for fresh adjudication on merits, with no coercive steps to be taken against the petitioner during the pendency of the case. The Court noted that the orders were ex parte, violated principles of natural justice by not affording a fair opportunity of hearing, and lacked sufficient reasoning for the determined amounts.
Held
The Court held that the impugned orders were bad in law due to violations of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the proceedings without sufficient reasoning. The Court found that the authorities had not adjudicated the matter on the attending facts and circumstances, failing to deal with all issues of fact and law. Consequently, the Court quashed and set aside the impugned orders. The Court directed the petitioner to deposit ten percent of the total amount (if not already deposited) as a prerequisite for hearing the appeal, and additionally deposit another ten percent of the demand raised before the Assessing Officer within four weeks. These deposits were to be without prejudice to the parties' rights and subject to the final order. The Court also directed the de-freezing of the petitioner's bank accounts. 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 considering all materials, including the applicability of Section 16(2) of the GST Act. The Assessing Authority was to pass a speaking order within two months of the petitioner's appearance, and 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 merits and all issues were left open.
Key Issues
1. Whether the impugned orders dated 02.06.2022, 07.12.2020, and 08.01.2021, passed by the Additional Commissioner of State Tax (Appeal), Joint Commissioner of State Tax, and in Form GST DRC-07 respectively, are bad in law due to violation of principles of natural justice and lack of reasoned adjudication? (Question of law and mixed fact and law) Petitioner's contention: The petitioner argued that the orders were ex parte, passed without affording a sufficient opportunity of hearing, and lacked adequate reasoning to justify the demand. They contended that these violations of natural justice vitiated the orders. Revenue's contention: The Revenue did not object to the matter being remanded to the Assessing Authority for fresh adjudication on merits. They agreed that the case should be decided afresh and no coercive steps would be taken against the petitioner during the pendency of the case.
Sections Cited
Section 16(2)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 03-08-2022 Heard learned counsel for the parties. Petitioner has prayed for the following relief(s):- 2/8 3/8 Petitioner has prayed for quashing of the order dated 02.06.2022 passed by the Additional Commissioner of State Tax (Appeal), Tirhut Division, Muzaffarpur vide Memo No. 345 (Annexure-9); order dated 07.12.2020 passed by Respondent No. 4, namely the Joint Commissioner of State Tax, West Circle, 4/8 Muzaffarpur, (Annexure-7) and summary of the order in Form GST DRC-07 dated 08.01.2021 passed in Reference No. ZD100121005058E (Annexure-7/1). The orders were ex parte in nature. Learned counsel for the Revenue, states that he has no objection if the matter is remanded to the Assessing Authority for deciding the case afresh. Also, the case shall be decided on merits. Also, during pendency of the case, no coercive steps shall be taken against the petitioner. Statement accepted and taken on record. However, having heard learned counsel for the parties as also perused the record made available, we are of the considered view that this Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any reasons sufficient even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, 5/8 entails civil consequences. We also find the authorities not to have adjudicated the matter on the attending facts and circumstances. All issues of fact and law ought to have been dealt with, even if the proceedings were to be ex parte in nature. As such, on this short ground alone, we dispose of the present writ petition in the following mutually agreeable terms: (a) We quash and set aside the impugned order order dated 02.06.2022 passed by the Additional Commissioner of State Tax (Appeal), Tirhut Division, Muzaffarpur vide Memo No. 345 (Annexure-9); order dated 07.12.2020 passed by Respondent No. 4, namely the Joint Commissioner of State Tax, West Circle, Muzaffarpur, (Annexure-7) and summary of the order in Form GST DRC-07 dated 08.01.2021 passed in Reference No. ZD100121005058E (Annexure-7/1); (b) We accept the statement of the petitioner that ten per cent of the total amount, being condition prerequisite for hearing of the appeal, already stands deposited. If that were so, well and good. However, if the amount is not deposited for whatever reason(s), same shall be done before the next date; (c) Further the petitioner undertakes to additionally deposit ten per cent of the amount of the demand raised before the Assessing Officer. This shall be done within four weeks;
6/8 (d) This deposit shall be without prejudice to the respective rights and contention of the parties and subject to the order passed by the Assessing Officer. However, if it is ultimately found that the petitioner’s deposit is in excess, the same shall be refunded within two months from the date of passing of the order; (e) We also direct for de-freezing/de-attaching of the bank account(s) of the writ-petitioner, if attached in reference to the proceedings, subject matter of present petition. This shall be done immediately; (f) Petitioner undertakes to appear before the Assessing Authority on 29th of August, 2022 at 10:30 A.M., if possible through digital mode; (g) The Assessing Authority shall decide the case on merits after complying with the principles of natural justice; (h) Opportunity of hearing shall be afforded to the parties to place on record all essential documents and materials, if so required and desired; (i) During pendency of the case, no coercive steps shall be taken against the petitioner. (j) The Assessing Authority shall pass a fresh order only after affording adequate opportunity to all concerned, 7/8 including the writ petitioner. Also, he shall deal with all the materials, including applicability of Section 16(2) of the GST Act; (k) Petitioner through learned counsel undertakes to fully cooperate in such proceedings and not take unnecessary adjournment; (l) The Assessing Authority shall decide the case on merits expeditiously, preferably within a period of two months from the date of appearance of the petitioner; (m) The Assessing Authority shall pass a speaking order assigning reasons, copy whereof shall be supplied to the parties; (n) Liberty reserved to the petitioner to challenge the order, if required and desired; (o) Equally, liberty reserved to the parties to take recourse to such other remedies as are otherwise available in accordance with law; (p) We are hopeful that as and when petitioner takes recourse to such remedies, before the appropriate forum, the same shall be dealt with, in accordance with law, with a reasonable dispatch; (q) We have not expressed any opinion on merits and 8/8 all issues are left open; (r) If possible, proceedings during the time of current Pandemic [Covid-19] be conducted through digital mode; The instant petition stands disposed of in the aforesaid terms. Interlocutory Application(s), if any, stands disposed of. veena/rajiv- (Sanjay Karol, CJ) ( S. Kumar, J) AFR/NAFR CAV DATE Uploading Date Transmission Date
Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.