M/S Chanda Yadav vs. The State Of Bihar

Held

The Court quashed and set aside all the impugned orders, including the original order of the Joint Commissioner and the appellate orders of the Additional Commissioner. The Court found that the original order was bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner. Additionally, the ex parte order did not provide sufficient reasons for determining the amount due. The Court noted that such orders, entailing civil consequences, are unsustainable on these grounds alone. The Court accepted the petitioner's statement that 10% of the total amount had been deposited as a prerequisite for hearing the appeal. The petitioner was directed to deposit an additional 10% of the demand within four weeks, without prejudice to the rights of the parties and subject to the final order. Bank accounts were to be de-frozen immediately. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, 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, M/s Chanda Yadav Matadi, challenged orders passed by the Joint Commissioner of State Tax, Munger Circle, and the Additional Commissioner of State Taxes (Appeals), Bhagalpur Division. The original order dated 03.03.2020 was passed by the Joint Commissioner under Section 74(1) of the Bihar Goods and Services Tax Act, 2017, along with a summary order in Form GST DRC-07 dated 05.03.2020. The petitioner's appeal against this order was rejected by the Additional Commissioner on grounds of delay, with a subsequent request for rectification also being rejected. The petitioner sought quashing of these orders, alleging they were cryptic, non-speaking, violative of natural justice, and that proceedings were initiated prematurely without invoking Section 61 prior to Section 74. The petitioner also challenged recovery actions under Section 79(1)(c) due to non-compliance with the proviso to Section 78.

Key Issues

1. Whether the order dated 03.03.2020 passed by the Joint Commissioner of State Tax is cryptic, non-speaking, and violative of the principles of natural justice, as argued by the petitioner? 2. Whether the proceedings initiated under Section 74 of the Bihar Goods and Services Tax Act, 2017, were illegal and premature due to the non-invocation of Section 61 prior to initiating proceedings under Section 74, as contended by the petitioner? 3. Whether the recovery action taken under Section 79(1)(c) of the Bihar Goods and Services Tax Act, 2017, was illegal and without jurisdiction due to non-compliance with the proviso to Section 78, as argued by the petitioner? 4. Whether the appellate orders rejecting the appeal on grounds of delay and the subsequent request for rectification were justified, as argued by the petitioner? The petitioner argued that the original order was passed ex parte without sufficient opportunity for hearing and lacked proper reasoning. They also contended that Section 61 should have been invoked before Section 74, making the latter proceedings premature. The petitioner further argued that recovery actions were illegal due to non-compliance with Section 78. The Revenue, through its counsel, had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps during the pendency.