M/S Madan Kumar vs. The State Of Bihar

Held

The Court quashed and set aside the appellate order dated February 27, 2021, and the original order dated March 5, 2020, along with the summary of order. The Court found that the delay in filing the appeal was sufficiently explained by COVID-19 restrictions, rendering the rejection on limitation grounds unsustainable. Furthermore, the Court held that the original order was passed in violation of the principles of natural justice, as the petitioner was not afforded sufficient time to represent their case, and the order was ex-parte and lacked 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 further deposit of 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 afresh on merits, complying with 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 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 Madan Kumar, a proprietorship firm, challenged an order dated March 5, 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 initial order solely on grounds of limitation. The petitioner contended that the initial order was cryptic, non-speaking, and violative of natural justice, as their reply was not considered. They also argued that recovery proceedings under Section 79(1)(c) were illegal due to non-compliance with Section 78 of the Act. The appeal was rejected due to delay, which the petitioner attributed to COVID-19 restrictions.

Key Issues

1. Whether the appeal filed by the petitioner against the order dated March 5, 2020, was rightly rejected by the appellate authority on the grounds of limitation, considering the prevailing COVID-19 restrictions? (Mixed question of law and fact, concerning principles of natural justice and procedural compliance). 2. Whether the order dated March 5, 2020, passed by the Assistant Commissioner of State Taxes, was in violation of the principles of natural justice, specifically the right to a fair hearing, and was it a non-speaking order that failed to consider the petitioner's reply and assign sufficient reasons for determining the tax, interest, and penalty liabilities? (Question of law, concerning principles of natural justice and Section 74(1) of the Bihar Goods and Services Tax Act, 2017). 3. Whether the recovery proceedings initiated under Section 79(1)(c) of the Bihar Goods and Services Tax Act, 2017, were illegal due to non-compliance with the proviso to Section 78 of the Act? (Question of law, concerning Section 79(1)(c) and Section 78 of the Bihar Goods and Services Tax Act, 2017). Petitioner's arguments: The petitioner argued that the delay in filing the appeal was sufficiently explained by COVID-19 restrictions. They contended that the original order was passed in violation of natural justice principles, was cryptic, and did not consider their reply. They also argued that recovery actions were illegal due to non-compliance with statutory provisions. 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 taken during pendency.