Associated Power Structures PVT. LTD. vs. The State Of Bihar

Held

The Court quashed the impugned show cause notice dated 14.02.2021 (Form GST DRC-01), the summary of order dated 23.02.2021 (Form GST DRC-07), and the subsequent rectification orders dated 12.04.2021. The Court directed the Assessing Officer to pass a fresh order in terms of the CGST Rules, 2017 and BGST Rules, 2017. The petitioner undertook to appear before the Assessing Authority on 09.08.2021. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording an opportunity of hearing to the parties, and passing a speaking order. No coercive steps were to be taken against the petitioner during the pendency of the case. The bank account(s) of the petitioner were to be de-frozen immediately. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open. The Assessing Authority was to decide the case expeditiously, preferably within two months from the petitioner's appearance.

Facts

The petitioner, Associated Power Structures Pvt. Ltd., filed a writ petition before the Patna High Court challenging a show cause notice and a summary of order issued by the Assistant Commissioner of State Tax, Patliputra, for the period April 2020 to September 2020. The petitioner contended that these actions were taken in violation of the procedures prescribed in the CGST and BGST Rules and the principles of natural justice. The revenue, through the Government Pleader, fairly conceded that the Assistant Commissioner had made mistakes in issuing the impugned orders, including significant discrepancies in the demanded amounts. The court noted that the authority only realized the errors after the court pointed out the wide differences in penalty imposition.

Key Issues

1. Whether the show cause notice and summary of order issued by the Assistant Commissioner of State Tax, Patliputra, for the period April 2020 to September 2020, were in accordance with the procedure prescribed in Rule 142 of the CGST Rules, 2017 and BGST Rules, 2017, and whether they violated the principles of natural justice? (Question of law and fact, turning on Rule 142, Section 73(9) of CGST Act, 2017, and principles of natural justice). Petitioner's Arguments: The petitioner argued that the impugned show cause notice and summary of order were procedurally flawed and violated the principles of natural justice. They sought quashing of these orders and a stay on further proceedings. Revenue's Arguments: The revenue, through the Government Pleader, conceded that the Assistant Commissioner had made mistakes in issuing the impugned orders, including significant discrepancies in the demanded amounts, and agreed to rectify them.