Sohan Rai vs. The State Of Bihar

Facts

The petitioner, Sohan Rai, filed a writ petition before the Patna High Court 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 order dated March 6, 2020, passed by the Assistant Commissioner of State Taxes, Buxar Circle. The appeal was rejected solely on the grounds of being barred by limitation. The original order dated March 6, 2020, passed by the Assistant Commissioner, was an ex-parte order under Section 74(1) of the Bihar Goods and Service Tax Act, 2017, read with Rule 142(5) of the Bihar Rules, 2017. The petitioner contended that the delay in filing the appeal was due to COVID-19 restrictions and that the original order was passed without proper application of mind and in violation of principles of natural justice. The Union of India was impleaded as a respondent.

Held

The Court held that the delay in filing the appeal was sufficiently explained due to COVID-19 restrictions. The Court found the ex-parte order dated March 6, 2020, to be 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 his case, and (b) the ex-parte order did not provide sufficient reasons to determine the amount due and payable by the assessee. The Court emphasized that an ex-parte order passed in violation of natural justice entails civil consequences. Consequently, the Court quashed and set aside the impugned order dated February 11, 2021, passed by the Additional Commissioner of State Taxes (Appeals) and the original order dated March 6, 2020, passed by the Assistant Commissioner of State Taxes. The Court directed the Assessing Authority to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and de-freezing any attached bank accounts. The Court also noted that 10% of the total demand had been deposited, and the petitioner undertook to deposit another 10% within four weeks, without prejudice to the rights of the parties. No coercive steps were to be taken against the petitioner during the pendency of the fresh proceedings, which were to be decided expeditiously, preferably within two months. 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 appeal filed by the petitioner before the Additional Commissioner of State Taxes (Appeals) was barred by limitation, considering the COVID-19 pandemic and relevant court orders? 2. Whether the ex-parte order dated March 6, 2020, passed by the Assistant Commissioner of State Taxes was bad in law due to violation of principles of natural justice and non-application of mind? Petitioner's Arguments: The petitioner argued that the delay in filing the appeal was sufficiently explained by the COVID-19 pandemic and the orders passed by the High Court in CWJC No. 5633 of 2020, which extended limitation periods. The petitioner also contended that the original order dated March 6, 2020, was cryptic, non-speaking, passed ex-parte, and failed to consider the credit balance in the electronic credit ledger and admitted figures of taxable outward supplies. The petitioner sought quashing of both the appellate order and the original assessment order. Revenue's Arguments: The Revenue, through its counsel, stated that it had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits. The Revenue also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.