M/S Ragini Kumari A Proprietorship Firm vs. The State Of Bihar Through The Principal Secretary Cum Commissioner

Held

The Court quashed and set aside both the order dated February 27, 2021, passed by the Additional Commissioner of State Taxes (Appeals) and the original order dated March 6, 2020, and the summary of order in Form GST DRC-07, passed by the Assistant Commissioner of State Taxes. The Court found that the original order was bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex-parte nature of the order without sufficient reasoning. The Court accepted the petitioner's statement that 10% of the total amount was deposited as a prerequisite for appeal hearing and directed the petitioner to deposit an additional 10% of the demand within four weeks, without prejudice to the parties' rights. The Court also directed the de-freezing of the petitioner's bank accounts. 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 merits and all issues were left open.

Facts

The petitioner, M/s Ragini Kumari, a proprietorship firm, challenged an ex-parte order dated March 6, 2020, passed by the Assistant Commissioner of State Taxes, Munger Circle, under Section 74(1) of the Bihar Goods And Services Tax Act, 2017, and a summary of order in Form GST DRC-07. The petitioner also challenged an order dated February 27, 2021, by the Additional Commissioner of State Taxes (Appeals), Bhagalpur Division, which rejected their appeal against the original order on grounds of delay. The petitioner contended that the original order was cryptic, non-speaking, and violative of natural justice, and that recovery proceedings under Section 79(1)(c) were initiated without complying with the proviso to Section 78 of the Bihar Act, 2017. The petitioner sought quashing of both orders, a declaration that the original order was illegal, and a restraint on coercive recovery.

Key Issues

1. Whether the ex-parte order dated March 6, 2020, passed by the Assistant Commissioner of State Taxes, Munger Circle, 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, specifically the right to a fair opportunity of hearing. 2. Whether the order dated February 27, 2021, passed by the Additional Commissioner of State Taxes (Appeals) rejecting the petitioner's appeal on grounds of delay, is sustainable, considering the COVID-19 restrictions. 3. Whether the recovery action initiated under Section 79(1)(c) of the Bihar Act, 2017, for the amount demanded in the order dated March 6, 2020, is illegal due to non-compliance with the proviso to Section 78 of the Bihar Act, 2017. Petitioner's arguments: The original order was passed ex parte without sufficient time for hearing and lacked proper reasoning, violating natural justice. Recovery proceedings were initiated illegally. The delay in filing the appeal was due to COVID-19 restrictions. 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.