Associated Power Structures PVT. LTD. vs. The State Of Bihar

Facts

The petitioner, Associated Power Structures Pvt. Ltd., filed a writ petition before the Patna High Court challenging a show cause notice dated February 14, 2021, and a summary of order dated February 23, 2021, issued by the Assistant Commissioner of State Tax for the period April 2018 to March 2019. The petitioner contended that the notice and order were issued in violation of procedural rules and principles of natural justice, specifically alleging insufficient time for representation and a lack of sufficient reasoning in the ex parte order. The revenue, through its counsel, agreed to a remand of the matter 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 proceedings.

Held

The Court held that it was not precluded from interfering in the matter, notwithstanding the statutory remedy, as the order appeared ex facie bad in law. The Court identified two primary reasons for interference: (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 order lacked sufficient reasoning, making it difficult to decipher how the officer determined the amount due. The Court found that an ex parte order passed in violation of natural justice entails civil consequences. Consequently, the Court quashed and set aside the impugned notice and order. The Court directed the petitioner to deposit ten percent of the total amount demanded, if not already deposited, and additionally deposit another ten percent of the demand within four weeks, without prejudice to their rights. The bank accounts of the petitioner were ordered 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 and affording adequate opportunity to all parties, preferably within two months. 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 and all issues were left open.

Key Issues

1. Whether the show cause notice and summary of order issued by the Assistant Commissioner of State Tax, for the period April 2018 to March 2019, are liable to be quashed for violating the principles of natural justice, specifically the right to a fair opportunity of hearing, as contended by the petitioner? 2. Whether the ex parte order passed by the Assistant Commissioner of State Tax lacks sufficient reasoning to determine the amount due and payable by the assessee, thereby rendering it bad in law, as argued by the petitioner? Petitioner's Arguments: The petitioner argued that the proceedings initiated by the Assistant Commissioner of State Tax were in violation of the principles of natural justice, as they were not afforded sufficient time to present their case. They also contended that the ex parte order lacked adequate reasoning, making it legally unsustainable. The petitioner sought a writ of certiorari to quash the impugned notice and order, and a writ of mandamus to stay the proceedings and restrain coercive measures. 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.