Ajit Kumar vs. The State Of Bihar, Through The Joint Commissioner Of State Tax

Facts

The petitioner filed a writ petition before the Patna High Court challenging a notice in Form GST DRC-13 dated January 11, 2021, issued by the Assistant Commissioner of State Tax, Patna, and a notice under Section 79(1)(c) in Form GST DRC-13 dated March 19, 2020. The petitioner contended that the notices were issued in violation of principles of natural justice, as they were not afforded a fair opportunity of hearing and the orders were passed ex parte without sufficient reasoning. The Revenue, represented by the learned counsel, agreed to a remand of the case to the Assessing Authority for a fresh decision on merits, with no coercive steps to be taken against the petitioner during the pendency of the case. The Court impleaded the Union of India as a party respondent based on relevant circulars.

Held

The Court held that the impugned notices in Form GST DRC-13 dated January 11, 2021, and the notice under Section 79(1)(c) dated March 19, 2020, were bad in law due to a violation of the principles of natural justice. The Court found that the petitioner was not afforded a fair opportunity of hearing and that the orders were passed ex parte without sufficient reasoning to determine the amount due. The Court emphasized that such orders, entailing civil consequences, are unsustainable on these grounds alone. Consequently, the Court quashed and set aside the impugned notices. The Court accepted the petitioner's undertaking to deposit ten percent of the total amount (which was stated to have already been deposited) and an additional ten percent of the demand raised before the Assessing Officer within four weeks. These deposits were to be without prejudice to the parties' rights and subject to the Assessing Officer's final order, with a direction for refund if the deposit was found to be in excess. The Court also directed the de-freezing of the petitioner's bank accounts. 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 fresh order expeditiously, preferably within two months from the petitioner's appearance. No opinion was expressed on the merits of the case, and all issues were left open.

Key Issues

1. Whether the impugned notices in Form GST DRC-13 dated January 11, 2021, and the notice under Section 79(1)(c) dated March 19, 2020, are liable to be quashed on the grounds of violation of principles of natural justice, specifically the lack of a fair opportunity of hearing and ex parte orders without sufficient reasoning? (Question of law) Petitioner's Arguments: The petitioner argued that the notices and subsequent orders were passed in violation of the principles of natural justice. They contended that they were not given sufficient time to present their case and that the orders were passed ex parte. The petitioner also argued that the orders lacked sufficient reasoning to determine the amount due and payable by the assessee, leading to civil consequences. 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.