Raj Kumar Singh Raja Construction Private Limited vs. State Of Bihar

Facts

The petitioner, Raj Kumar Singh Raja Construction Private Limited, challenged orders passed by the Joint Commissioner of State Tax (Respondent No. 3) for tax periods February 2019 and August 2019, and an order by the Additional Commissioner of State Tax (Appeal) (Respondent No. 2). The primary challenge was to the order dated 07.03.2020, which was passed ex parte under Section 74 of the Bihar Goods and Services Tax Act, 2017, and the summary of order in Form GST DRC-07. The petitioner's appeal against the 07.03.2020 order was dismissed by Respondent No. 2 on 13.02.2021, solely on the grounds of delay in filing. The petitioner sought to quash these orders, alleging violation of natural justice and lack of a speaking order. The Union of India was impleaded as Respondent No. 4.

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 to represent their case; and (b) the orders were passed ex parte without assigning sufficient reasons to determine the amount due and payable by the assessee. The Court noted that such orders, entailing civil consequences, could be interfered with notwithstanding the statutory remedy. The Court quashed and set aside the order dated 13.02.2021 passed by the Additional Commissioner of State Tax (Appeal) and the order dated 07.03.2020 passed by the Joint Commissioner of State Tax, along with the summary of order. The Court accepted the petitioner's statement that 10% of the total amount was deposited and directed the petitioner to deposit an additional 10% of the demand within four weeks. The bank account of the petitioner was ordered to be de-frozen. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order within two months from 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 merits and all issues were left open.

Key Issues

1. Whether the orders passed by the Joint Commissioner of State Tax for the tax periods February 2019 and August 2019, under Section 74 of the BGST Act, are liable to be quashed for violation of the principles of natural justice, specifically the lack of a reasonable opportunity of being heard and the absence of a speaking order? (Question of law). 2. Whether the appeal filed by the petitioner against the order dated 07.03.2020 was rightly dismissed in liminie by the Additional Commissioner of State Tax (Appeal) on the solitary ground of delay in filing, considering the prevailing COVID-19 restrictions? (Question of mixed law and fact). Petitioner's Arguments: The petitioner contended that the orders were passed ex parte without granting a reasonable opportunity of being heard and without passing a speaking order, thus violating principles of natural justice. They also argued that the delay in filing the appeal was sufficiently explained due to COVID-19 restrictions. Revenue's Arguments: The learned counsel for the Revenue stated they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits, and that no coercive steps would be taken against the petitioner during the pendency of the case.