Sai Enterprises (Proprietorship) vs. The Union Of INDIA

Facts

The petitioner, Sai Enterprises, through its proprietor Bijay Kumar Chourasia, filed a writ petition challenging an order dated September 9, 2021, passed by the Additional Commissioner, State Tax (Appeal), Bhagalpur Division. This appellate order rejected the petitioner's appeal against an order dated February 25, 2020, passed by the Assistant Commissioner of State Tax, Bhagalpur Circle, and a Summary of Order in Form GST DRC-07 dated February 26, 2020. The petitioner contended that both original orders were ex parte and that the amendment brought by Section 50 of the GST Act was not considered. The Revenue stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps taken against the petitioner during pendency.

Held

The Court held that it was not precluded from interfering with the statutory remedy when, ex facie, an order is bad in law. Two primary reasons were cited: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner to represent their case, and (b) the ex parte nature of the orders which did not provide sufficient reasoning for determining the amount due. The Court found that the authorities had not adjudicated the matter on the attending facts and circumstances, and all issues of fact and law ought to have been dealt with, even in ex parte proceedings. Consequently, the Court quashed and set aside the impugned order dated September 9, 2021, the order dated February 25, 2020, and the Summary of Order in Form GST DRC-07. The Court directed the Assessing Authority to decide the case afresh on merits after complying with the principles of natural justice, affording adequate opportunity to all concerned, and passing a speaking order. The Court also made directions regarding the deposit of amounts by the petitioner and de-freezing of bank accounts. No opinion was expressed on the merits of the case.

Key Issues

1. Whether the impugned orders passed by the Assistant Commissioner of State Tax and the Additional Commissioner, State Tax (Appeal) are liable to be quashed and set aside on the grounds of violation of principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the proceedings, as argued by the petitioner? 2. Whether the ex parte orders, which allegedly do not provide sufficient reasons for determining the amount due, are bad in law and warrant interference by the High Court despite the availability of statutory remedies? Petitioner's Arguments: The petitioner argued that the orders were passed ex parte, without affording sufficient time for representation and without considering the applicability of the amendment brought by Section 50 of the GST Act. They contended that the orders lacked sufficient reasoning and violated the principles of natural justice. Revenue's Arguments: The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, subject to certain conditions.