M/S Amar Nath Saran vs. The Union Of INDIA

Held

The High Court quashed and set aside the impugned order dated July 27, 2022, passed by the Additional Commissioner (Appeal), the order dated December 2, 2021, passed by the Assistant Commissioner, and the summary of order dated December 3, 2021, in Form GST DRC-07. The Court found the orders to be bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient reasoning in the ex parte orders. The Court noted that the authorities had not adjudicated the matter on the attending facts and circumstances. The Court directed the petitioner to deposit ten percent of the total amount demanded (if not already deposited) and an additional ten percent of the demand raised before the Assessing Officer within four weeks. These deposits were to be without prejudice to the parties' rights and subject to the final order. The Court also directed the de-freezing of the petitioner's bank accounts. The petitioner was directed to appear before the Assessing Authority on November 2, 2022, and the Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order 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, leaving all issues open.

Facts

The petitioner, M/s Amar Nath Saran, filed a writ petition challenging an order dated July 27, 2022, passed by the Additional Commissioner (Appeal), Patna West Division, Patna. This appellate order had rejected the petitioner's appeal ex parte, upholding an earlier order dated December 2, 2021, passed by the Assistant Commissioner of State Tax, Patna South. The Assistant Commissioner had rejected the petitioner's Input Tax Credit claim filed in Form GSTR-3B for the financial year 2020-21, imposing a demand of Rs. 9,42,213/- as tax, interest, and penalty under Section 73(9) of the BGST Act. A demand notice in Form GST DRC-07 was also issued on December 3, 2021. The petitioner sought to set aside these orders.

Key Issues

1. Whether the ex parte orders passed by the Assistant Commissioner and upheld by the Additional Commissioner (Appeal) were in violation of the principles of natural justice, specifically the right to a fair opportunity of hearing? 2. Whether the authorities adequately adjudicated the matter on the attending facts and circumstances, providing sufficient reasons for the determination of the amount due? Petitioner's Arguments: The petitioner contended that the orders were passed ex parte without affording sufficient time for representation and lacked proper reasoning. They argued that the principles of natural justice were violated, and the authorities failed to adjudicate on the facts and circumstances of the case. Revenue's Arguments: The Revenue, through the Additional Solicitor General, stated they had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, without the limitation period being a bar. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.