M/S R.K. Agri Biz LLP vs. The State Of Bihar

Held

The High Court, while not precluding itself from interfering despite statutory remedies, found the impugned orders to be bad in law on two primary grounds: violation of the principles of natural justice due to insufficient opportunity of hearing, and the ex parte nature of the orders which lacked sufficient reasoning for determining the amount due. Consequently, the Court quashed and set aside the appellate order dated October 14, 2020, the order dated December 17, 2018, and the letter dated January 11, 2021. The Court directed the de-freezing of the petitioner's bank account. The petitioner was directed to deposit ten percent of the total demand before the Assessing Officer within four weeks, in addition to any amount already deposited as a prerequisite for appeal hearing. 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 of the petitioner's appearance. 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 and all issues were left open.

Facts

The petitioner, M/s R.K. AGRI BIZ LLP, filed a writ petition challenging an appellate order dated October 14, 2020, passed by the Additional Commissioner of State Taxes (Appeal), which rejected their appeal against an order dated December 17, 2018, passed by the Joint Commissioner of State Taxes. The Joint Commissioner's order had rejected a substantial part of the petitioner's claim for entry tax credit under Section 140 of the Bihar Goods and Services Tax Act, 2017. Subsequently, the Joint Commissioner issued a letter on January 11, 2021, attaching the petitioner's cash credit account and demanding ₹9,604,960/- based on the affirmed appellate order. The petitioner sought quashing of these orders and a declaration that their claim for transitional credit was valid under Section 140(1) and not subject to Section 140(3).

Key Issues

1. Whether the appellate order dated October 14, 2020, and the consequential order dated December 17, 2018, rejecting the petitioner's claim for transitional credit under Section 140 of the Bihar Goods and Services Tax Act, 2017, are legally sustainable? 2. Whether the attachment of the petitioner's bank account and the demand for ₹9,604,960/- under Section 79 of the Act are valid? Petitioner's Arguments: The petitioner contended that their claim for entry tax credit under Section 140(1) of the Act was valid and that Section 140(3) was not applicable to their case. They argued that the orders passed were in violation of the principles of natural justice, as they were not afforded a fair opportunity of hearing and the orders were passed ex parte without sufficient reasoning. They also sought a declaration that the class of dealers and goods under Section 140(3) is distinct from that under Section 140(1). Revenue's Arguments: The Revenue, through its counsel, stated it 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.