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

Held

The Court held that the impugned order dated 05.02.2021, and the summary of order in Form GST DRC-07, were bad in law due to a clear violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing afforded to the petitioner. The Court noted that the order was passed ex parte and did not assign sufficient reasons, making it difficult to decipher how the officer determined the amount due. The Court found that such an order, entailing civil consequences, could be interfered with by the High Court, notwithstanding statutory remedies. Consequently, the Court quashed and set aside the impugned order. The Court directed the petitioner to deposit 20% of the demand within four weeks, without prejudice to the rights of the parties. The bank accounts of the petitioner were to be de-frozen immediately. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording opportunity to all parties, and passing a speaking order 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 the merits of the case, leaving all issues 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 05.02.2021 and a summary of order in Form GST DRC-07, also dated 05.02.2021, issued by the Assistant Commissioner of State Tax, Shahabad Circle, Ara (Respondent No. 3). The impugned order rejected the petitioner's input tax credit claim and imposed a demand of Rs. 2,68,936.00, including tax, interest, and penalty, without affording the petitioner an opportunity of hearing. The petitioner sought to quash this order, declare it non-speaking and violative of natural justice, and restrain coercive recovery actions.

Key Issues

1. Whether the ex-parte order dated 05.02.2021, issued by the Assistant Commissioner of State Tax, Shahabad Circle, Ara, is liable to be quashed for violating the principles of natural justice, specifically the right to a fair opportunity of hearing, and for being non-speaking, as argued by the petitioner? 2. Whether the Court, despite the existence of statutory remedies, is precluded from interfering with the impugned order on grounds of being ex facie bad in law, as contended by the petitioner? Petitioner's Arguments: The petitioner argued that the impugned order was passed ex parte, without sufficient opportunity for them to present their case, thus violating the principles of natural justice. They further contended that the order was cryptic, non-speaking, and failed to provide sufficient reasons for determining the demand, making it liable to be set aside. The petitioner also argued that the Court should interfere as the order was bad in law. 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 a fresh decision on merits, and that no coercive steps would be taken against the petitioner during the pendency of the case.