Trident Digital Network vs. The State Of Bihar

Held

The Court held that the impugned orders dated July 24, 2019, and August 26, 2019, passed by the Joint Commissioner of State Taxes, were bad in law due to a violation of the principles of natural justice. Specifically, the Court found that the petitioner was not afforded a fair opportunity of hearing, as insufficient time was given for representation. Furthermore, the ex parte orders lacked decipherable reasoning to justify the determination of the amounts due from the assessee. The Court emphasized that orders passed in violation of natural justice, which entail civil consequences, can be interfered with by the High Court, notwithstanding the availability of statutory remedies. Consequently, the Court quashed and set aside both impugned orders. The Court also directed the petitioner to deposit 10% of the total amount (if not already deposited) and an additional 10% of the demand raised before the Assessing Officer within four weeks, without prejudice to the parties' rights. The bank accounts of the petitioner were to be de-frozen immediately. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all concerned, and preferably within two months from 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 the merits of the case, leaving all issues open.

Facts

The petitioner, Trident Digital Network, a partnership firm, challenged two orders dated July 24, 2019, and August 26, 2019, passed by the Joint Commissioner of State Taxes, West Circle, Muzaffarpur. These orders imposed tax, penalty, and interest on the petitioner for the periods May 2018-March 2019 and April 2019-June 2019. The petitioner contended that the orders were passed in disregard of the prescribed procedure for non-filing of returns under the Bihar Goods and Services Tax Act, 2017, and relevant circulars. The revenue, represented by the State of Bihar and its tax authorities, did not object to the matter being remanded for fresh decision. The High Court noted that the delay in filing was explained by COVID-19 restrictions.

Key Issues

1. Whether the impugned orders dated July 24, 2019, and August 26, 2019, passed under Section 74 of the Bihar Goods and Services Tax Act, 2017, are liable to be quashed for violation of principles of natural justice, specifically the right to a fair opportunity of hearing and for being passed ex parte without sufficient reasoning? Petitioner's Arguments: The petitioner argued that the impugned orders were passed in a procedure unknown to the provisions of the Bihar Goods and Services Tax Act, 2017, concerning non-filing of returns. They contended that insufficient time was provided for them to represent their case, and the ex parte orders lacked sufficient reasoning to determine the amounts due. The petitioner sought quashing of the orders and a direction against coercive action. Revenue's Arguments: The learned counsel for the Revenue stated that they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.