Sushant Kumar vs. The State Of Bihar

Facts

The petitioner, Sushant Kumar, challenged a demand notice dated January 29, 2020, issued by the Assistant Commissioner of State Tax, Patna Central, Patna West, Bihar. This notice demanded BGST/CGST of Rs. 744,357.34 from the petitioner, retrospectively applied to a part of a bill amounting to Rs. 3,167,478.00. This bill pertained to work done under agreements for road construction in the financial year 2018-19, assessed for the assessment year 2019-20. The petitioner sought quashing of this demand and payment of the GST amount with interest and penalty. The State's 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 case.

Held

The Court held that the impugned letter dated January 29, 2020, issued by the Assistant Commissioner of State Tax, Patna Central, Patna West, Bihar, under Section 74(1) of the Bihar Goods and Service Tax Act, 2017, was bad in law. This was primarily due to two reasons: (a) violation of the principles of natural justice, as the petitioner was not afforded a fair opportunity of hearing and sufficient time to represent his case, and (b) the order was passed ex parte without assigning sufficient reasons to determine the amount due. The Court quashed and set aside the impugned letter. The Court also directed the petitioner to deposit ten percent of the total amount demanded if not already done, and additionally deposit another ten percent of the demand before the Assessing Officer within four weeks, without prejudice to the rights of the parties. The bank accounts of the petitioner were ordered 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 concerned, and to pass a fresh order expeditiously, preferably within two months from 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 merits and all issues were left open.

Key Issues

1. Whether the impugned demand notice issued by the Assistant Commissioner of State Tax, Patna Central, Patna West, Bihar, under Section 74(1) of the Bihar Goods and Service Tax Act, 2017, is bad in law due to violation of principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner to represent his case? 2. Whether the ex parte order passed by the Assistant Commissioner of State Tax, Patna Central, Patna West, Bihar, lacks sufficient reasoning to determine the amount due and payable by the assessee? Petitioner's contentions: The petitioner argued that the order was bad in law due to violations of the principles of natural justice, specifically that a fair opportunity of hearing was not provided and insufficient time was given to present his case. The order was also alleged to be ex parte and lacking sufficient reasons for the demand. Revenue's contentions: The learned counsel for the Revenue stated no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits. The Revenue also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.