M/S Aishra Technofab Engineers vs. The Union Of INDIA

Facts

The petitioner, M/s Aishra Technofab Engineers, challenged an order dated 18.02.2021, passed by the Assistant Commissioner of State Tax, Patna Central, Patna West, Bihar. This order, issued under Section 73(9) of the BGST Act, 2017, along with a summary of order in Form GST DRC-07 dated 22.02.2021, raised a demand of Rs. 21,85,202/- for the tax period April, 2019 to March, 2020. The petitioner contended that the order was passed in violation of principles of natural justice, as they were not afforded sufficient time to present their case, and that the order was unreasoned and cryptic. The Revenue stated it had no objection if the matter was remanded for fresh decision on merits, with no coercive steps taken against the petitioner during pendency.

Held

The Court held that the impugned order dated 18.02.2021, passed by the Assistant Commissioner of State Tax, was bad in law on two grounds: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing due to insufficient time afforded to the petitioner, and (b) the order being unreasoned and cryptic, failing to provide sufficient justification for the determined tax demand. The Court found that these procedural defects, which entailed civil consequences, justified interference despite the existence of statutory remedies. Consequently, the Court quashed and set aside the impugned order. The Court directed the petitioner to deposit 20% of the demanded amount within four weeks, without prejudice to the parties' rights. The bank accounts of the petitioner were to be de-frozen immediately. The Assessing Authority was directed to decide the case afresh on merits, complying with principles of natural justice, affording adequate opportunity for hearing and document submission, 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.

Key Issues

1. Whether the impugned order dated 18.02.2021, passed by the Assistant Commissioner of State Tax, is bad in law due to violation of the principles of natural justice, specifically the right to a fair opportunity of hearing, as argued by the petitioner? The petitioner contended that insufficient time was provided to represent their case. The Revenue did not contest this point, agreeing to a remand. 2. Whether the impugned order is bad in law for being unreasoned and cryptic, failing to provide sufficient justification for the determined tax demand, as argued by the petitioner? The petitioner argued that the order lacked decipherable reasons for the demand. The Revenue did not contest this point, agreeing to a remand. The Court had to decide if these procedural infirmities warranted interference despite the availability of statutory remedies.