M/S Ankit Paper Mart vs. The State Of Bihar

Facts

The petitioner, M/s Ankit Paper Mart, challenged two orders: one dated March 16, 2020, passed by the Assistant Commissioner State Tax under Section 73 of the Central Goods and Services Tax Act, 2017, and the Bihar Goods and Services Tax Act, 2017, along with a summary of order in Form GST DRC-07; and another dated January 29, 2022, passed by the Additional Commissioner of State Taxes (Appeals), which rejected the petitioner's appeal against the initial order. The petitioner sought to quash these orders and restrain coercive recovery actions. The revenue, represented by the State, agreed to a remand to the Assessing Authority for fresh decision on merits, with no coercive steps during the pendency of the case. The tax period in dispute is 2019-20.

Held

The Court held that the impugned orders were bad in law on two primary grounds: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the failure to consider the contentions raised by the petitioner by both the Assessing Authority and the Appellate Authority; and (b) the orders failed to assign sufficient reasons, even decipherable from the record, as to how the officer determined the amount due and payable by the assessee. The Court found that an order passed in violation of the principles of natural justice entails civil consequences. Consequently, the Court quashed and set aside the impugned orders dated January 29, 2022, and March 16, 2020. The Court directed the Assessing Authority to decide the case afresh on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order with reasons. The petitioner was directed to deposit ten percent of the total amount demanded within four weeks, in addition to the ten percent already deposited as a prerequisite for appeal hearing. The bank account(s) of the petitioner were ordered to be de-frozen immediately. The Assessing Authority was directed to decide the case expeditiously, preferably within two months from the petitioner's appearance. 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 impugned orders dated March 16, 2020, and January 29, 2022, are liable to be quashed on the grounds of violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and non-consideration of contentions raised by the petitioner, as provided under the Central Goods and Services Tax Act, 2017, and the Bihar Goods and Services Tax Act, 2017? 2. Whether the impugned orders are liable to be quashed for failing to assign sufficient reasons for determining the amount due and payable by the assessee, as required by law? Petitioner's Arguments: The petitioner contended that both the Assessing Authority and the Appellate Authority violated the principles of natural justice by not considering their contentions and by passing orders without sufficient reasoning. They argued that the orders were bad in law due to these procedural lapses. Revenue's Arguments: The revenue did not object to the matter being remanded to the Assessing Authority for a fresh decision on merits and agreed that no coercive steps would be taken against the petitioner during the pendency of the case.