M/S Agarwal Trading vs. The State Of Bihar

Facts

The petitioner, M/s Agarwal Trading, challenged two orders: an order dated 20.02.2020 passed by the Assistant Commissioner of State Taxes (Respondent No. 3) under Section 73 of the Bihar Goods And Services Tax Act, 2017, and an order dated 04.10.2021 passed by the Additional Commissioner of State Taxes (Appeals) (Respondent No. 2) rejecting the petitioner's appeal against the first order. The petitioner contended that both orders were cryptic, non-speaking, and violative of the principles of natural justice, particularly regarding the opportunity of hearing. The tax period in dispute was June 2018. The petitioner sought quashing of these orders and a restraint on coercive recovery of the demand, which included tax, interest, and penalty.

Held

The Court held that the impugned orders were bad in law for two primary reasons: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner to present their case, and (b) the orders were passed ex parte without sufficient reasoning to determine the amount due. The Court found that the authorities had not adjudicated the matter on the attending facts and circumstances, and all issues of fact and law ought to have been dealt with. Consequently, the Court quashed and set aside the impugned order dated 04.10.2021 passed by the Additional Commissioner of State Taxes (Appeals) and the order dated 20.02.2020 passed by the Assistant Commissioner of State Taxes, along with the summary of order. 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. The Court also directed the de-freezing of the petitioner's bank accounts and stipulated that no coercive steps would be taken during the pendency of the fresh proceedings. The Court expressly 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 order dated 20.02.2020 passed by the Assistant Commissioner of State Taxes under Section 73 of the Bihar Goods And Services Tax Act, 2017, is unsustainable in law for being cryptic, non-speaking, and violative of the principles of natural justice, specifically the right to a fair opportunity of hearing? 2. Whether the order dated 04.10.2021 passed by the Additional Commissioner of State Taxes (Appeals) is unsustainable in law for upholding a non-speaking and procedurally flawed order from the lower authority? Petitioner's Arguments: The petitioner argued that both impugned orders were highly cryptic, misconceived, non-speaking, and violated the principles of natural justice. They contended that insufficient time was provided for representation and that the orders were passed ex parte without sufficient reasoning to determine the amount due. The petitioner also argued that the authorities failed to adjudicate the matter on the attending facts and circumstances. Revenue's Arguments: The learned counsel for the Revenue stated they had no objection if the matter was 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.