M/S B.L. Kashyap And Sons LTD. vs. The State Of Bihar

Facts

The petitioner, whose GSTIN is 10AAACB0205F1ZV, challenged two ex parte orders: an order dated November 26, 2018, passed by the Deputy Commissioner of State Taxes, Patna, and a Summary of Order in Form GST DRC-07 dated November 26, 2018. The petitioner's appeal against these orders, filed before the Additional Commissioner of State Taxes (Appeal), Patna, was rejected by an order dated January 11, 2021, on the grounds of delay. The petitioner contended that the delay was sufficiently explained due to COVID-19 restrictions. The Revenue stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps taken against the petitioner during the pendency of the case. The High Court noted that the orders were ex parte and lacked sufficient reasoning.

Held

The Court held that the impugned orders were bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the proceedings without sufficient reasoning. The Court found that the orders, being ex parte and passed in violation of natural justice, entailed civil consequences. Consequently, the Court quashed and set aside the order dated January 11, 2021, passed by the Additional Commissioner of State Taxes (Appeal), and the orders dated November 26, 2018, passed by the Deputy Commissioner of State Taxes and the Summary of Order in Form GST DRC-07. The Court accepted the petitioner's undertaking to deposit 10% of the total amount demanded (if not already deposited) and an additional 10% of the demand raised before the Assessing Officer within four weeks. These deposits are without prejudice to the parties' rights and subject to the final order. 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 preferably within two months of the petitioner's appearance. No coercive steps are to be taken against the petitioner during this period. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open.

Key Issues

1. Whether the impugned orders, passed ex parte and without sufficient reasons, are bad in law and violate the principles of natural justice, specifically the right to a fair opportunity of hearing? (Relates to principles of natural justice and adequate reasoning in orders). Petitioner's Arguments: The petitioner argued that both the original orders and the appellate order rejecting the appeal were passed ex parte. They contended that they were not afforded a fair opportunity of hearing and that the orders lacked sufficient reasoning to determine the amount due. The delay in filing the appeal was attributed to COVID-19 restrictions, which should have been considered. The petitioner also highlighted that the orders entailed civil consequences, making the violation of natural justice a critical ground for interference. Revenue's Arguments: The Revenue stated that it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits. They also agreed that no coercive steps should be taken against the petitioner during the pendency of the case.