M/S. Frontline (Ncr) Business Solutions Private Limited vs. The Union Of INDIA

Facts

The petitioner, M/s. Frontline (NCR) Business Solutions Private Limited, challenged an order dated 05.03.2020 by the Additional Commissioner, State Tax (Appeals), Patna, which rejected their appeal against an order dated 06.08.2019 by the Joint Commissioner of State Tax, Patna, and a Summary of Order in Form GST DRC-07 dated 12.09.2019. The appeal was rejected solely on the grounds of being barred by limitation. Both the original orders were ex parte. The petitioner contended that the delay in filing the appeal was due to COVID-19 restrictions. The Revenue stated it had no objection to the matter being remanded for fresh decision on merits, with no coercive steps taken against the petitioner during pendency.

Held

The Court quashed and set aside the impugned order dated 05.03.2020 passed by the Additional Commissioner, State Tax (Appeals), the order dated 06.08.2019 by the Joint Commissioner of State Tax, and the Summary of Order in Form GST DRC-07 dated 12.09.2019, along with the notice dated 25.02.2020 in Form GST DRC-13. The Court found the orders to be bad in law on two grounds: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time for the petitioner to present their case, and (b) the ex parte nature of the orders which did not provide sufficient reasons for determining the amount due. The Court accepted the petitioner's statement that ten percent of the total amount, a prerequisite for appeal hearing, was deposited, and directed further deposit of another ten percent of the demand within four weeks. These deposits were to be without prejudice to the parties' rights. The Court also directed de-freezing of the petitioner's bank accounts. The petitioner was directed to appear before the Assessing Authority on 04.04.2022, and 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. No opinion was expressed on the merits of the case, and all issues were left open.

Key Issues

1. Whether the appeal filed by the petitioner before the Additional Commissioner, State Tax (Appeals) was liable to be rejected on the ground of limitation, considering the prevailing COVID-19 restrictions, thereby violating the principles of natural justice? 2. Whether the ex parte orders passed by the Joint Commissioner of State Tax and the Summary of Order in Form GST DRC-07 were sustainable in law, given the alleged lack of sufficient reasons and violation of the principles of natural justice? Petitioner's Arguments: The petitioner argued that the delay in filing the appeal was sufficiently explained by the COVID-19 restrictions. They also contended that the ex parte orders were passed in violation of the principles of natural justice, as they were not afforded a fair opportunity of hearing and the orders lacked sufficient reasoning to determine the amount due. Revenue's Arguments: The Revenue stated that it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, and that no coercive steps would be taken against the petitioner during the pendency of the case.