Durain Industries Limited vs. The State Of Bihar

Facts

Durain Industries Limited (the petitioner) filed a writ petition before the Patna High Court challenging an ex-parte order dated 25.02.2022 passed by the Joint Commissioner of State Taxes, Patna, and a summary of order dated 30.01.2020 in Form GST DRC-07. These orders raised a demand for tax, interest, and penalty for the period 2017-18. The petitioner sought to quash these orders and restrain coercive recovery. The Revenue, through its counsel, agreed to the matter being remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps taken against the petitioner during the pendency of the case.

Held

The Court held that the impugned order dated 25.02.2022 and the summary of order dated 30.01.2020 were bad in law due to a violation of the principles of natural justice. Specifically, the petitioner was not afforded sufficient time to represent its case, and the ex-parte order lacked sufficient reasoning for the determined demand. The Court found that an ex-parte order passed in violation of natural justice entails civil consequences. Consequently, the Court quashed and set aside the impugned orders. The Court directed the petitioner to deposit 20% of the demanded amount within eight weeks, without prejudice to the parties' rights. Bank accounts were to be de-frozen immediately. The petitioner was directed to appear before the Assessing Authority on 20.04.2022, and the Assessing Authority was directed to decide the case on merits after complying with natural justice principles, affording adequate opportunity to all parties, and passing a speaking order within two months. No coercive steps were to be taken during assessment. The Court explicitly stated it had not expressed any opinion on the merits of the case.

Key Issues

1. Whether the ex-parte order dated 25.02.2022 and the summary of order dated 30.01.2020, passed by the Joint Commissioner of State Taxes, are liable to be quashed on grounds of violation of principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient reasons for the demand? (Central Goods and Services Tax Act, 2017 and Bihar Goods and Services Tax Act, 2017). Petitioner's Contention: The petitioner argued that the impugned orders were ex-parte, passed without affording sufficient time for representation and lacked adequate reasoning, thereby violating the principles of natural justice and settled legal principles against reopening decided matters without new material. Revenue's Contention: The Revenue stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, and no coercive steps would be taken against the petitioner during this period.