M/S Shiv Enterprises, Muzaffarpur vs. The Union Of INDIA

Held

The Court held that the impugned orders were bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing to the petitioner. The Court noted that no sufficient time was afforded to the petitioner to represent its case, and the ex parte orders did not provide sufficient reasoning for determining the amount due. The Court also found that the orders were passed in violation of principles of natural justice, which entails civil consequences. Consequently, the Court quashed and set aside both the order dated 28.12.2020 passed by the Additional Commissioner and the order dated 08.02.2020 passed by the Joint Commissioner. The Court directed the de-freezing of the petitioner's bank account. The matter was remanded to the Assessing Authority to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all concerned, and passing a speaking order. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open. The petitioner was directed to deposit 10% of the total amount (if not already deposited) and an additional 10% of the demand raised before the Assessing Officer within four weeks, without prejudice to the rights of the parties.

Facts

The petitioner, M/s Shiv Enterprises, challenged two orders: one dated 08.02.2020 by the Joint Commissioner, State Tax, Muzaffarpur, rejecting its claim for Input Tax Credit (ITC) on the ground that TRAN-1 was filed on 05.11.2019 instead of 20.10.2019, and another dated 28.12.2020 by the Additional Commissioner, State Tax, Muzaffarpur, which mechanically confirmed the earlier order. The petitioner also challenged the consequential order freezing its bank account on 11.01.2021. The petitioner contended that these orders were passed ex parte without proper communication or sufficient opportunity to be heard, especially during a period of personal tragedy for the proprietor. The revenue, through learned counsel, had no objection to the matter being remanded for fresh decision on merits, with no coercive steps during pendency.

Key Issues

1. Whether the impugned orders dated 08.02.2020 and 28.12.2020, passed by the Joint Commissioner and Additional Commissioner, State Tax, Muzaffarpur respectively, are liable to be set aside on the ground of violation of principles of natural justice, specifically the lack of a fair opportunity of hearing to the petitioner? 2. Whether the consequential order freezing the petitioner's bank account is sustainable in light of the alleged procedural irregularities in the preceding orders? Petitioner's arguments: The petitioner argued that the orders were passed ex parte, without affording sufficient time to represent its case, and lacked sufficient reasoning. The petitioner also highlighted personal circumstances affecting the proprietor at the relevant time. The petitioner relied on the fact that the TRAN-1 was filed only a few days late and that the certified copy of the appellate order was uploaded, yet the appeal was rejected for non-enclosure of a certified copy. Revenue's arguments: The learned counsel for the Revenue stated that they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits, and no coercive steps would be taken against the petitioner during the pendency of the case.