Sks Construction vs. The State Of Bihar

Held

The Court held that the ex-parte order dated 27.10.2021 and the subsequent demand notice dated 21.07.2022 were liable to be quashed primarily on the ground of violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex-parte nature of the assessment without sufficient reasons. The Court found the order to be bad in law on these grounds alone. Consequently, the Court quashed and set aside both the impugned order and the notice of demand. The Court directed the petitioner to deposit twenty percent of the demand raised within four weeks, without prejudice to the rights of the parties. The Court also ordered the de-freezing of the petitioner's bank accounts. 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 speaking order within two months. The Court explicitly stated that it had not expressed any opinion on the merits of the case and all issues were left open.

Facts

The petitioner, SKS Construction, challenged an ex-parte order dated October 27, 2021, issued by the Assistant Commissioner of State Taxes, Bhagalpur Circle, in Form GST DRC-07. This order, passed under Section 62 of the Central Goods and Services Tax Act, 2017, rejected the petitioner's input tax credit claim and imposed tax of Rs. 999,787/- and interest of Rs. 104,977/- for the period January 2021 to March 2021. The petitioner also challenged a subsequent demand notice dated July 21, 2022, in Form GST DRC-13. The petitioner contended that the order was passed without sufficient notice and opportunity for hearing, violating 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 during pendency.

Key Issues

1. Whether the ex-parte order dated 27.10.2021, passed under Section 62 of the Central Goods and Services Tax Act, 2017, is liable to be quashed for violation of principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient reasons. 2. Whether the notice of demand dated 21.07.2022, issued under Section 79 of the Central Act, 2017, is liable to be quashed as it is a sequel to the impugned ex-parte order. 3. Whether the statutory return filed by the petitioner for January 2021 to March 2021, even if delayed, is valid and holds primacy over a best judgment assessment made under Section 62(1) of the Act. Petitioner's arguments: The petitioner argued that the order was ex-parte, passed without adequate notice or opportunity to represent its case, and lacked sufficient reasoning. They also contended that a valid return filed, even after the due date but in compliance with Section 47, should replace a best judgment assessment under Section 62(1), and that Section 62(2) is directory, not mandatory. They relied on Sections 16(2), 16(4), 39, 46, and 47 of the Central Act, 2017. Revenue's arguments: The Revenue did not contest the quashing of the order and agreed to a remand for fresh consideration on merits.