Rahul Tradewing PVT. LTD. vs. The State Of Bihar

Held

The Court quashed and set aside the impugned appellate order dated August 6, 2021, and the original order dated February 12, 2021, along with the Summary of Order in Form GST DRC-07 dated February 12, 2021. The Court found that both orders were ex parte and violated the principles of natural justice, specifically the right to a fair opportunity of hearing. The Court also noted that the orders lacked sufficient reasoning to determine the amount due. Based on these grounds, the Court decided to dispose of the writ petition. The Court accepted the petitioner's statement that 10% of the total amount had 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 parties' rights and subject to the final order. The Court also directed the de-freezing of the petitioner's bank accounts. The Assessing Authority was directed to decide the case on merits after complying with principles of natural justice, affording adequate opportunity to all concerned, 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.

Facts

The petitioner, Rahul Tradewing Pvt. Ltd., filed a writ petition challenging an appellate order dated August 6, 2021, passed by the Additional Commissioner of State Taxes (Appeal), Purnea Division, which rejected their appeal. The appeal was against an order dated February 12, 2021, passed by the Joint Commissioner of State Taxes, Purnea Circle, imposing tax and interest liability for the financial year 2019-2020. Both the original order and the appellate order were ex parte. The petitioner contended that the orders were cryptic, non-speaking, and violated principles of natural justice. The revenue, through its counsel, agreed to a remand of the matter to the Assessing Authority for fresh decision on merits, with no coercive steps to be taken against the petitioner during the pendency of the case.

Key Issues

1. Whether the appellate order dated August 6, 2021, passed by the Additional Commissioner of State Taxes (Appeal) is liable to be quashed for being cryptic, non-speaking, and in violation of Section 107(12) of the Bihar Goods and Services Tax Act, 2017? 2. Whether the order dated February 12, 2021, passed by the Joint Commissioner of State Taxes is liable to be quashed for being ex parte, lacking sufficient reasons, and violating the principles of natural justice? 3. Whether the denial of input tax credit to the petitioner on account of the supplier's default, without action against the supplier, is illegal and unsustainable? Petitioner's arguments: The petitioner argued that both the original and appellate orders were passed ex parte, without affording a fair opportunity of hearing and without sufficient reasoning, thus violating principles of natural justice. They further contended that the denial of input tax credit due to a supplier's default, when the petitioner had already paid the tax to the supplier, was illegal and contrary to the principle of 'lex non cogit ad impossibilia' (the law does not compel the impossible). They relied on the concept that the supplier acts as a trustee for the government regarding collected tax. Revenue's arguments: The Revenue stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps against the petitioner.