Sohan Rai vs. The State Of Bihar Through The Principal Secretary Cum Commissioner

Facts

The petitioner, Sohan Rai, filed a writ petition challenging an order dated February 11, 2021, passed by the Additional Commissioner of State Taxes (Appeals), Patna West Division, which rejected his appeal against an ex-parte order dated March 6, 2020, passed by the Assistant Commissioner of State Taxes, Buxar Circle. The appeal was dismissed solely on the grounds of delay. The petitioner sought to quash both the appellate order and the original ex-parte order, arguing that the original order was non-speaking, lacked application of mind, and was passed in violation of principles of natural justice. The petitioner also contended that the rejection of his appeal on grounds of delay was erroneous, considering the COVID-19 pandemic and relevant court orders.

Held

The High Court quashed and set aside the impugned order dated February 11, 2021, passed by the Additional Commissioner of State Taxes (Appeals), and the ex-parte order dated March 6, 2020, passed by the Assistant Commissioner of State Taxes, along with the Summary of Order in Form GST DRC-07. The Court found that the original order was passed in violation of the principles of natural justice, specifically the right to a fair opportunity of hearing, as the petitioner was not afforded sufficient time to represent his case. The ex-parte nature of the order and the lack of sufficient reasoning to determine the amount due were also cited as grounds for setting aside the order. The Court accepted the petitioner's statement that 10% of the total amount had already been deposited as a prerequisite for appeal hearing. The petitioner was directed to deposit an additional 10% of the demand within seven days of the account being made operational. The bank accounts of the petitioner were ordered to be de-frozen. The petitioner was directed to appear before the Assessing Officer on August 9, 2021, for a fresh adjudication, with the Assessing Officer to pass a new order expeditiously after affording adequate opportunity to all parties. 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 February 11, 2021, passed by the Additional Commissioner of State Taxes (Appeals) rejecting the petitioner's appeal on grounds of delay, is bad in law considering the COVID-19 pandemic and this Court's orders in CWJC No. 5633 of 2020, thereby violating the principles of natural justice and fair opportunity of hearing? 2. Whether the ex-parte order dated March 6, 2020, passed by the Assistant Commissioner of State Taxes, is cryptic, non-speaking, and based on a complete non-application of mind to the credit balance in the electronic credit ledger and disclosed figures of taxable outward supplies, thus violating principles of natural justice? Petitioner's Arguments: The petitioner argued that the appellate order rejecting the appeal on delay was illegal, citing the COVID-19 pandemic and this Court's previous orders extending limitation periods. He further contended that the original ex-parte order was passed without proper application of mind and without affording a fair opportunity of hearing, making it liable to be quashed. The petitioner relied on the Court's orders in CWJC No. 5633 of 2020 regarding the extension of limitation due to the pandemic. Revenue's Arguments: The Revenue did not object to the matter being remanded to the Assessing Authority for a fresh decision and stated that no coercive steps would be taken against the petitioner during the pendency of the case.