Sheetlal Kumari vs. The State Of Bihar

Facts

The petitioner sought to quash a Summary of Order in Form GST DRC-07 dated March 4, 2020, issued by the Assistant Commissioner of State Tax, and a notice to a third person under Section 79(1)(c) dated January 11, 2021, issued by the Joint Commissioner of State Tax. The petitioner contended that these orders were passed ex parte and in violation of the principles of natural justice, as insufficient time was provided for them to present their case and the orders lacked sufficient reasoning. 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 pendency.

Held

The Court held that it was not precluded from interfering despite the existence of statutory remedies, as the orders appeared ex facie bad in law. The primary reasons for this conclusion were the violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the orders which did not provide sufficient reasoning for the determined amount. The Court found that these violations, entailing civil consequences, were sufficient grounds to dispose of the writ petition. The Court quashed and set aside the Summary of Order in Form GST DRC-07 and the notice to a third person. It directed the petitioner to deposit 10% of the total amount (if not already deposited) and an additional 10% of the demand within four weeks, without prejudice to the parties' rights. Bank accounts were to be de-frozen. The petitioner was directed to appear before the Assessing Authority on August 9, 2021, and the Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all concerned, and passing a fresh order expeditiously, preferably within two months. No coercive steps were to be taken against the petitioner during this period. The Court explicitly stated it had not expressed any opinion on merits and all issues were left open.

Key Issues

1. Whether the Summary of Order in Form GST DRC-07 and the notice to a third person under Section 79(1)(c) are liable to be quashed on the ground of violation of principles of natural justice, specifically the lack of adequate opportunity of hearing and ex parte nature of the proceedings? (Question of law and mixed fact and law, turning on principles of natural justice and potentially Section 79 of the CGST Act). Petitioner's Arguments: The petitioner argued that the orders were passed ex parte, without affording sufficient time to represent their case, and lacked decipherable reasons for determining the amount due. This violation of natural justice, they contended, entails civil consequences. Revenue's Arguments: The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits. The judgment does not record specific arguments from the Revenue regarding the validity of the impugned orders themselves, beyond their consent to a remand.