Star INDIA Construction PVT. LTD. vs. The State Of Bihar

Facts

The petitioner filed a writ petition challenging two orders: one dated March 4, 2020, by the Assistant Commissioner, Patna Special Circle, and another dated March 14, 2021, by the Additional Commissioner (Appeal), State Tax, Patna. Both orders were passed ex parte. The petitioner contended that they were not afforded a fair opportunity of hearing and that the ex parte orders lacked sufficient reasoning for determining the amount due. The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision and agreed not to take coercive steps against the petitioner during the pendency of the case. The Court noted that it was not precluded from interfering despite the statutory remedy, given the apparent legal infirmities.

Held

The Court held that the ex parte orders passed by the authorities 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 afforded to the petitioner, and (b) the ex parte orders did not provide sufficient reasoning, even from the record, to justify the determination of the amount due and payable by the assessee. The Court found that these violations, particularly the denial of natural justice, had civil consequences. Consequently, the Court quashed and set aside both the order of the Additional Commissioner (Appeal) and the order of the Assistant Commissioner. The Court also directed the de-freezing of the petitioner's bank accounts, ordered the petitioner to deposit 10% of the demand raised (in addition to the 10% already deposited as a pre-condition for appeal hearing), and scheduled a fresh hearing before the Assessing Officer on August 9, 2021, with a direction to decide the matter on merits expeditiously, preferably within two months. The Court explicitly stated that it had not expressed any opinion on the merits of the case and all issues were left open.

Key Issues

1. Whether the ex parte orders passed by the Assistant Commissioner and the Additional Commissioner (Appeal) violated the principles of natural justice, specifically the right to a fair opportunity of hearing, as contemplated under the relevant provisions of the GST Act and Rules? Petitioner's Arguments: The petitioner argued that they were not given sufficient time to present their case and that the ex parte orders were passed without adequate reasoning to determine the tax liability. They contended that such orders, entailing civil consequences, were bad in law. Revenue's Arguments: The Revenue did not object to the matter being remanded to the Assessing Authority for a fresh decision and agreed to refrain from coercive steps against the petitioner. No specific arguments were recorded regarding the validity of the ex parte orders themselves.