M/S Saroj Kumar vs. The State Of Bihar

Held

The Court quashed and set aside both the order dated 27.02.2021 passed by the Additional Commissioner of State Taxes (Appeals) and the order dated 02.02.2020 passed by the Joint Commissioner of State Taxes. The Court found that the initial order was passed ex parte in violation of the principles of natural justice, as the petitioner was not afforded a fair opportunity of hearing and the order lacked sufficient reasoning. The Court also accepted that the delay in filing the appeal was sufficiently explained due to COVID restrictions. The Court directed the petitioner to deposit 10% of the total demand before the Assessing Officer within four weeks, in addition to the 10% already deposited as a prerequisite for appeal hearing. The bank accounts of the petitioner were to be de-frozen. The Assessing Authority was directed to decide the case afresh 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 it had not expressed any opinion on the merits of the case, leaving all issues open.

Facts

The petitioner, M/s Saroj Kumar, a proprietorship firm, filed a writ petition challenging two orders. The first order, dated 02.02.2020, was passed by the Joint Commissioner of State Taxes, Munger Circle, under Section 74(1) of the Bihar Goods And Services Tax Act, 2017, and issued in Form GST DRC-07 under Rule 142(5) of the Bihar Goods And Services Tax Rules, 2017. The second order, dated 27.02.2021, was passed by the Additional Commissioner of State Taxes (Appeals), Bhagalpur Division, rejecting the petitioner's appeal against the first order solely on grounds of delay. The petitioner sought to quash both orders, arguing the initial order was cryptic, non-speaking, violated natural justice, and that recovery actions were illegal. The petitioner also sought a refund of amounts already recovered.

Key Issues

1. Whether the order dated 02.02.2020, passed by the Joint Commissioner of State Taxes under Section 74(1) of the Bihar Goods And Services Tax Act, 2017, is liable to be quashed for being cryptic, non-speaking, and violative of the principles of natural justice, as the petitioner's reply was allegedly not considered. 2. Whether the order dated 27.02.2021, passed by the Additional Commissioner of State Taxes (Appeals), rejecting the petitioner's appeal on grounds of delay, is sustainable, considering the explanation provided for the delay. 3. Whether the recovery actions taken under Section 79(1)(c) of the Bihar Act, 2017, were illegal due to non-compliance with the proviso to Section 78 of the Bihar Act, 2017. Petitioner's arguments: The initial order was passed without considering the petitioner's reply, violating principles of natural justice. The appellate order rejecting the appeal on delay was erroneous, especially given COVID-19 restrictions. Recovery actions were illegal as they did not comply with statutory prerequisites. 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 during the pendency.