M/S Brajesh Enterprises vs. The State Of Bihar

Held

The Court held that the order dated July 30, 2019, passed by the Joint Commissioner of State Taxes, Munger Circle, cancelling the petitioner's GST registration, was violative of the principles of natural justice. The Court found the order to be non-speaking and cryptic, failing to refer to the show-cause notice and the petitioner's response thereto. The Court noted that the petitioner had subsequently filed all pending returns and discharged its tax liabilities for the period preceding July 2019. Considering the peculiar facts and circumstances, including the demise of the petitioner's tax consultant and the onset of the Covid-19 pandemic, the Court found that the authorities ought to have condoned the delay in filing the returns. The Court quashed the cancellation order and directed the restoration of the petitioner's registration. The Principal Secretary-cum-Commissioner, Department of State Taxes, Government of Bihar, Patna, was directed to finalize the petitioner's assessment and pass appropriate orders in accordance with the law. The issue of delay in filing returns was expressly stated to remain closed.

Facts

M/s Brajesh Enterprises, a proprietorship firm, challenged an ex-parte order dated July 30, 2019, passed by the Joint Commissioner of State Taxes, Munger Circle, cancelling its GST registration. The cancellation was under Section 29 of the Bihar Goods And Services Tax Act, 2017, read with Rule 22 of the Bihar Goods And Services Tax Rules, 2017. The petitioner had responded to a show-cause notice dated July 16, 2019, with a communication dated July 25, 2019. The cancellation order, however, stated that no reply was submitted and the petitioner did not appear on the hearing date. The order determined zero tax, interest, penalty, or other amounts payable. The petitioner sought quashing of the cancellation order, restoration of registration, and a declaration that the cancellation violated natural justice. The petitioner also stated that its tax consultant, responsible for filing returns, had passed away, and it had subsequently filed pending returns and discharged tax liabilities for the period preceding July 2019 between December 3, 2020, and July 5, 2021.

Key Issues

1. Whether the ex-parte order dated July 30, 2019, cancelling the petitioner's GST registration under Section 29 of the Bihar Goods And Services Tax Act, 2017, read with Rule 22 of the Bihar Goods And Services Tax Rules, 2017, is violative of the principles of natural justice? Petitioner's arguments: The petitioner contended that the cancellation order was non-speaking, cryptic, and failed to refer to the show-cause notice and its response, thereby violating natural justice. The petitioner argued that it had filed its response and subsequently filed all pending returns and discharged its tax liabilities for the period preceding July 2019. It further argued that the delay in filing returns was due to circumstances beyond its control, including the demise of its tax consultant, and that the authorities ought to have condoned the delay. The petitioner relied on Rule 23(1) of the Bihar Rules, 2017, for restoration of registration. Revenue's arguments: The revenue, represented by the Standing Counsel, did not dispute the facts regarding the petitioner filing pending returns and discharging tax liabilities. The revenue also stated that the issue of delay in filing returns would remain closed and not be raised again.