Surabhi Enterprises vs. The State Of Bihar Through Assistant Commissioner Of State Tax

Facts

The petitioner filed a writ petition before the Patna High Court challenging an order dated January 22, 2021, passed by the Additional Commissioner, State Taxes (Appeal), Saran Division, Chapra. This order rejected the petitioner's appeal against an order dated March 5, 2020, passed by the Assistant Commissioner of State Tax, Siwan, Saran, Bihar. The appeal was rejected solely on the grounds of being barred by limitation. Both the original order and the summary of order in Form GST DRC-07 for the period October 2018-March 2019 were ex parte. The petitioner sought a direction to hear the appeal after condonation of delay. The Union of India was impleaded as a respondent.

Held

The Court held that it was not precluded from interfering with the matter despite the statutory remedy, as the order appeared bad in law. Two primary reasons were cited: (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 ex parte nature of the order which did not provide sufficient reasons for determining the amount due. The Court quashed and set aside the impugned order dated January 22, 2021, and the original order dated March 5, 2020. The Court accepted the petitioner's undertaking to deposit 10% of the total amount (if not already deposited) and an additional 10% of the demand raised before the Assessing Officer within four weeks. Bank accounts were 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 preferably within two months of 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 the merits of the case, leaving all issues open.

Key Issues

1. Whether the delay in filing the appeal should be condoned in light of COVID-19 restrictions, and if the appellate authority erred in rejecting the appeal solely on limitation without considering the merits or principles of natural justice? (Question of law and mixed fact and law) Petitioner's arguments: The petitioner contended that the delay in filing the appeal was sufficiently explained due to COVID-19 restrictions. They argued that the appellate order rejecting the appeal on limitation grounds, without considering the merits and while the original orders were ex parte and lacked sufficient reasoning, violated the principles of natural justice. The petitioner sought a direction for the case to be heard after condonation of delay. Revenue's arguments: The learned counsel for the Revenue stated that they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.