M S Scientifics And Aqua Systems vs. State Of Bihar

Facts

The petitioner, M S Scientifics and Aqua Systems, filed a writ petition before the Patna High Court challenging show cause notices and orders passed by the Assistant Commissioner of State Tax, Danapur West, Patna. The impugned orders pertained to the tax period April 2019 to March 2020 and included a summary of show cause notice dated 23.12.2020, a show cause notice dated 29.12.2020 under Section 73 of the Bihar Goods and Services Tax Act, 2017, and orders dated 04.02.2021 and 14.02.2021 passed under Section 73(9) of the Act. The petitioner sought to quash these notices and orders, alleging violation of principles of natural justice and lack of sufficient reasons in the ex parte orders. The Revenue stated it had no objection if the matter was remanded for fresh decision on merits.

Held

The Patna High Court quashed and set aside the impugned orders dated 04.02.2021 and 14.02.2021, as well as the summary of show cause notices dated 23.12.2020 and 29.12.2020. The Court found that the orders were passed in violation of the principles of natural justice, specifically the right to a fair opportunity of hearing, as the petitioner was not afforded sufficient time to represent their case. Additionally, the ex parte orders did not provide sufficient reasons for determining the amount due. The Court directed the petitioner to deposit ten percent of the demanded amount within four weeks, without prejudice to their rights. The bank accounts of the petitioner were ordered 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 adequate opportunity to all parties, and passing a speaking order within two months of the petitioner's appearance. No coercive steps were to be taken against the petitioner during the pendency of the proceedings. The Court explicitly stated that it had not expressed any opinion on the merits of the case and all issues were left open.

Key Issues

1. Whether the show cause notices and orders passed by the Assistant Commissioner of State Tax, Danapur West, Patna, for the tax period April 2019 to March 2020, were in violation of the principles of natural justice, specifically the right to a fair opportunity of hearing, as contended by the petitioner? 2. Whether the ex parte orders passed by the Assistant Commissioner of State Tax lacked sufficient reasons to determine the amount due and payable by the assessee, as argued by the petitioner? Petitioner's Arguments: The petitioner argued that the principles of natural justice were violated because they were not afforded a fair opportunity of hearing and insufficient time was given to present their case. They also contended that the ex parte orders lacked sufficient reasoning to justify the determined tax liability. Revenue's Arguments: The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits.