Nabi Ishrat Security Agency vs. The Union Of INDIA Through The Principal Chief Commissioner Of Central Tax

Held

The Court held that the impugned orders dated August 26, 2019, and August 28, 2019, passed by the Joint Commissioner, State Taxes, Danapur Circle, were bad in law and liable to be quashed and set aside. The primary reasons for this decision were the violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing afforded to the petitioner, and the fact that the orders were passed ex parte without sufficient reasoning to determine the amount due. The Court emphasized that such orders, entailing civil consequences, could be interfered with on these grounds alone. Consequently, the Court quashed the impugned orders. It directed that the deposits already made would be without prejudice to the parties' rights and subject to the final order of the Assessing Officer, with any excess deposit to be refunded within two months. The Court also ordered the de-freezing of the petitioner's bank accounts. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording all parties an opportunity to present their case, and passing a speaking order expeditiously, preferably 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.

Facts

The petitioner, Nabi Ishrat Security Agency, represented by its proprietor Ishrat Nabi, filed a writ petition before the Patna High Court challenging two orders dated August 26, 2019, and August 28, 2019, passed by the Joint Commissioner, State Taxes, Danapur Circle. The petitioner contended that 100% of the amount in question had been deposited by both the petitioner and a third party. The Revenue, through its counsel, agreed to the matter being remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps to be taken against the petitioner during the pendency of the case. The Court noted that despite the availability of statutory remedies, it could interfere due to apparent legal infirmities.

Key Issues

1. Whether the impugned orders dated August 26, 2019, and August 28, 2019, passed by the Joint Commissioner, State Taxes, Danapur Circle, 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 insufficient time afforded to the petitioner to represent its case, thereby leading to ex parte orders? Petitioner's Contention: The petitioner argued that the impugned orders were passed in violation of the principles of natural justice, as they were ex parte and did not provide sufficient time or opportunity for the petitioner to present their case. The petitioner also stated that 100% of the disputed amount had been deposited. Revenue's Contention: The Revenue had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, and agreed that no coercive steps would be taken against the petitioner during the pendency of the case.