Shankar Singh vs. The State Of Bihar

Held

The Court quashed and set aside both the demand order dated March 6, 2020, and the appeal rejection order dated January 23, 2021. The Court found that both orders were ex parte and passed in violation of the principles of natural justice, as the petitioner was not afforded a fair opportunity of hearing. The Court also noted that the ex parte orders did not provide sufficient reasoning for determining the amount due. The delay in filing the appeal was considered sufficiently explained due to COVID-19 restrictions. The Court accepted the petitioner's undertaking to deposit 10% of the total amount demanded (in addition to the 10% already deposited as a prerequisite for appeal hearing) within four weeks, without prejudice to the rights of the parties. 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, providing an opportunity for hearing, and passing a speaking order within two months of the petitioner's appearance. No opinion was expressed on the merits of the case, and all issues were left open.

Facts

The petitioner, Shankar Singh, proprietor of M/S Shivam Construction, challenged a demand order dated March 6, 2020, issued by the Assistant Commissioner of State Tax, Patna, which directed payment of GST on the total amount received, including GST. He also challenged the order dated January 23, 2021, by the Additional Commissioner of State Tax (Appeal), Patna, rejecting his appeal as barred by limitation. Both orders were passed ex parte. The petitioner sought quashing of these orders, a direction for an opportunity of hearing, and a stay on coercive action. The revenue stated it had no objection if the matter was remanded for fresh decision on merits, with no coercive steps during pendency.

Key Issues

1. Whether the demand order dated March 6, 2020, and the appeal rejection order dated January 23, 2021, are liable to be quashed on the grounds of violation of principles of natural justice and being ex parte without sufficient reasoning? (Question of law and mixed fact and law) Petitioner's arguments: The petitioner contended that the demand order was arbitrary as it levied GST on the total amount received, which already included GST. Furthermore, the appeal rejection order was passed without granting an opportunity of hearing, violating principles of natural justice. The delay in filing the appeal was attributed to COVID-19 restrictions. Revenue's arguments: The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, and no coercive steps would be taken against the petitioner during the pendency of the case.