M/S Loha Construction PVT. LTD. vs. The State Of Bihar

Facts

The petitioner, M/s Loha Construction Pvt. Ltd., filed a writ petition challenging an order dated August 18, 2021, passed by the Additional Commissioner of State Taxes (Appeals), Purnea Division. This order rejected the petitioner's appeal against an order dated January 21, 2021, passed by the Assistant Commissioner of State Taxes, Saharsa Circle. The initial order under Section 74 of the Bihar Goods and Services Tax Act, 2017, demanded duty of Rs. 6,36,335/-, interest of Rs. 1,04,475/-, and imposed a penalty of Rs. 6,36,335/- under both CGST and BGST Acts. The petitioner sought to quash these orders and restrain recovery. The Revenue stated it had no objection if the matter was remanded for fresh decision on merits, with no coercive steps during pendency.

Held

The Court held that the impugned orders were 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 afforded to the petitioner, and (b) the ex parte order lacked sufficient reasoning to determine the amount due. The Court found that these violations, entailing civil consequences, warranted interference despite the statutory remedy. Consequently, the Court quashed and set aside both the appellate order dated August 18, 2021, and the initial order dated January 21, 2021. The Court directed the petitioner to deposit 10% of the total demand within four weeks, without prejudice to their rights, and also undertake to deposit an additional 10% before the Assessing Officer. Bank accounts were to be de-frozen. The Assessing Authority was directed to decide the case on merits after complying with principles of natural justice, affording adequate opportunity, and passing a speaking order within two months of the petitioner's appearance. No coercive steps were to be taken 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 order dated August 18, 2021, passed by the Additional Commissioner of State Taxes (Appeals) is bad in law for violating the principles of natural justice, specifically the right to a fair opportunity of hearing and for being a non-speaking order? 2. Whether the order dated January 21, 2021, passed by the Assistant Commissioner of State Taxes is bad in law for being passed ex parte without sufficient reasons? Petitioner's Arguments: The petitioner contended that the appellate order dated August 18, 2021, was cryptic, non-speaking, and in violation of Section 107 of the BGST Act, 2017, failing to provide a fair opportunity of hearing. They also argued that the initial order was passed ex parte without sufficient reasoning. 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, and that no coercive steps would be taken against the petitioner during the pendency of the case.