M/S K.K.K.O. Brand vs. The State Of Bihar

Held

The Court held that the impugned order dated 02.12.2021, passed by the Joint Commissioner of State Tax, was bad in law on two grounds: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner, and (b) the order being ex-parte in nature and lacking sufficient reasons to decipher how the amount due was determined. The Court quashed and set aside the impugned order. The Court directed the petitioner to deposit twenty percent of the demand within four weeks, without prejudice to the parties' rights. The bank accounts of the petitioner were to be de-frozen. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording parties an opportunity to present documents, and passing a speaking order within two months of the petitioner's appearance. No coercive steps were to be taken against the petitioner during this period. The Court expressly stated that it had not expressed any opinion on merits and all issues were left open.

Facts

The petitioner, M/s K.K.K.O. Brand, through its proprietor Nand Kishor Singh, filed a writ petition before the Patna High Court challenging an ex-parte order dated 02.12.2021 and a summary of order in Form GST DRC-07, both issued by the Joint Commissioner of State Tax, Shahabad Circle, Ara. The impugned order rejected the petitioner's input tax credit claim and imposed a demand of Rs. 31,24,842.00, including tax, interest, and penalty. The petitioner contended that the order was passed without providing an adequate opportunity of hearing and was therefore violative of the principles of natural justice. The Revenue stated it had no objection if the matter was remanded for fresh decision on merits, with no coercive steps taken against the petitioner during the pendency.

Key Issues

1. Whether the ex-parte order dated 02.12.2021, issued by the Joint Commissioner of State Tax under Section 73(9) of the Bihar Goods and Services Tax Act, 2017, and Rule 142(5) of the Bihar Goods and Services Tax Rules, 2017, is bad in law due to 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? Petitioner's contention: The order is cryptic, misconceived, non-speaking, and violative of natural justice as it was passed ex-parte without sufficient opportunity for the petitioner to present their case. The petitioner sought quashing of the order and a declaration of its illegality. Revenue's contention: The Revenue had no objection to the matter being remanded 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.