M/S B.L. Kashyap And Sons LTD. vs. The State Of Bihar

Facts

M/s B.L. Kashyap and Sons Ltd. (the petitioner) filed a writ petition before the Patna High Court challenging an appellate order dated August 2, 2021, passed by the Additional Commissioner of State Taxes (Appeal), which rejected their appeal against an order dated February 10, 2021, issued by the Deputy Commissioner of State Taxes under Section 73 of the Bihar Goods and Services Tax Act, 2017 (BGST Act) and the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner sought to quash both the appellate order and the original order, arguing that the Deputy Commissioner erred in exercising jurisdiction without prior proceedings under Section 61 and Section 42(3) of the respective Acts. The petitioner also sought a stay on coercive recovery actions.

Held

The Patna High Court quashed and set aside both the appellate order dated August 2, 2021, and the original order dated February 10, 2021. The Court found that the original order was passed in violation of the principles of natural justice, specifically citing a lack of sufficient opportunity for the petitioner to present their case and the ex parte nature of the order without adequate reasoning to determine the amount due. The Court accepted the petitioner's statement that 10% of the total demand had already been deposited as a prerequisite for hearing the appeal, and directed the petitioner to deposit an additional 10% of the demand within four weeks. These deposits were to be without prejudice to the rights of the parties and subject to the final order of the Assessing Officer. The Court also directed the de-freezing of the petitioner's bank accounts and ordered the Assessing Authority to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity for hearing and submission of documents, 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.

Key Issues

1. Whether the order dated February 10, 2021, passed by the Deputy Commissioner of State Taxes under Section 73 of the BGST Act and CGST Act was erroneous due to a lack of preceding proceedings under Section 61 and Section 42(3) of the said Acts? 2. Whether the appellate order dated August 2, 2021, rejecting the petitioner's appeal, was passed without appreciating the factual and legal issues raised by the petitioner? Petitioner's Arguments: The petitioner contended that the Deputy Commissioner committed an error of jurisdiction by not initiating proceedings under Section 61 (scrutiny of returns) and Section 42(3) (recovery of tax) of the BGST Act and CGST Act before invoking Section 73 (determination of tax not paid or short paid or erroneously refunded). The petitioner also argued that the appellate order failed to appreciate the factual and legal issues raised in their appeal and that the original order was passed ex parte without sufficient opportunity for hearing and without adequate reasoning. Revenue's Arguments: The learned counsel for the Revenue stated that they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits, and that no coercive steps would be taken against the petitioner during the pendency of the case.