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 the amendment brought by Section 50 of the GST Act was not considered and that both original orders were passed ex parte. 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 orders were bad in law for two primary reasons: (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 reasoning for the determination of the amount due. The Court found that 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 orders passed by the Additional Commissioner (Appeal) and the Assistant Commissioner of State Tax, along with the Summary of Order. 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 parties, and passing a speaking order with reasons. The petitioner was directed to deposit an additional ten percent of the demand within four weeks, without prejudice to the rights of the parties. The bank accounts of the petitioner were to be de-frozen immediately. The Assessing Authority was directed to decide the case expeditiously, preferably within two months from 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 the merits of the case and all issues were left open.

Key Issues

1. Whether the impugned orders, passed ex parte, violated the principles of natural justice by not affording a fair opportunity of hearing to the petitioner? 2. Whether the impugned orders sufficiently reasoned the determination of the amount due and payable by the assessee? 3. Whether the appellate authority erred in not considering the applicability of the amendment brought by Section 50 of the GST Act? Petitioner's Arguments: The petitioner argued that the original orders were passed ex parte without sufficient time for them to represent their case and that the amendment brought by Section 50 was not taken into account. They contended that ex parte orders violating principles of natural justice entail civil consequences and that the authorities failed to adjudicate on the attending facts and circumstances. 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, with a condition that no coercive steps would be taken against the petitioner during the pendency of the case.