Shivam Jan Swasthya Devem Sarvangin Vikas Kendra vs. The State Of Bihar

Held

The Court quashed and set aside the impugned appellate order dated January 21, 2021, and the adjudication order dated March 2, 2020. The Court found that both orders were ex parte and passed in violation of the principles of natural justice, specifically the right to a fair opportunity of hearing. The Court noted that the ex parte orders did not provide sufficient reasons for determining the amounts due. The Court accepted the petitioner's undertaking to deposit ten percent of the total demand (if not already deposited) before the next date and an additional ten percent of the demand before the Assessing Officer within four weeks. These deposits were to be without prejudice to the parties' rights and subject to the Assessing Officer's final order, with provisions for refund if excess. The Court also directed the de-freezing of the petitioner's bank account. The petitioner was directed to appear before the Assessing Authority on August 16, 2021, for a decision on merits, with compliance with principles of natural justice and an opportunity for parties to present documents. The Assessing Authority was directed to decide the case expeditiously, preferably within two months, and pass a speaking order. The issue of exemption was to be examined by the Assessing Authority. The Court explicitly stated that it had not expressed any opinion on the merits of the case, leaving all issues open. The ratio decidendi is that ex parte orders passed in violation of natural justice, without sufficient reasoning, are liable to be set aside, and the matter should be remanded for fresh adjudication.

Facts

The petitioner, Shivam Jan Swasthya Evem Sarvangin Vikas Kendra, challenged an appellate order dated January 21, 2021, passed by the Additional Commissioner (Appeal), State Tax, which rejected their appeal against an adjudication order dated March 2, 2020, passed by the Deputy Commissioner of State Tax. The adjudication order directed the petitioner to deposit tax of Rs. 45,61,840/-, interest of Rs. 6,40,940/-, and penalty of Rs. 45,61,840/-, totaling Rs. 97,64,620/-. The petitioner also sought to quash the original adjudication order, a show cause notice dated January 27, 2020, and a recovery letter dated January 21, 2021, issued to their bank. The petitioner argued that both the adjudication and appellate orders were ex parte, lacked proper reasoning, and were issued without a Document Identification Number (DIN), violating principles of natural justice and relevant circulars. The revenue agreed to a remand to the Assessing Authority for fresh decision on merits.

Key Issues

1. Whether the appellate order dated January 21, 2021, passed by the Additional Commissioner (Appeal) is bad in law for being ex parte, lacking application of mind, and failing to deal with the grounds raised by the petitioner, thereby violating principles of natural justice? 2. Whether the adjudication order dated March 2, 2020, passed by the Deputy Commissioner of State Tax is bad in law for being ex parte and not providing sufficient reasons for determining the amount due? 3. Whether the show cause notice dated January 27, 2020, the adjudication order dated March 2, 2020, and the appellate order dated January 21, 2021, are in contravention of Circular No. 122/41/2019/GST dated November 5, 2019, for being issued without a DIN? 4. Whether the services provided by the petitioner are exempted under Sl. No. 3 of Notification No. 12/2017 Central Tax (Rate) dated June 28, 2017? Petitioner's Contentions: The petitioner argued that the orders were ex parte, passed without sufficient opportunity for hearing, and lacked proper reasoning. They contended that the orders were bad in law due to the absence of DIN, violating Circular No. 122/41/2019/GST. They also claimed their services were exempted. Revenue's Contentions: The revenue had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits.