Raj Kumar Singh Raja Construction Private Limited vs. State Of Bihar

Facts

The petitioner, Raj Kumar Singh Raja Construction Private Limited, challenged orders passed by the Joint Commissioner of State Tax (Respondent No. 3) and the Additional Commissioner of State Tax (Appeal) (Respondent No. 2). The primary order dated March 7, 2020, under Section 74 of the Bihar Goods and Services Tax Act, 2017, pertained to the tax period January 2019. The petitioner contended that this order was passed without a reasonable opportunity of being heard and was not a speaking order. An appeal filed against this order was dismissed in limine by Respondent No. 2 on February 13, 2021, solely on the grounds of delay. The petitioner also challenged an order dated Nil for the tax period August 2019 passed under Section 74(9) of the BGST Act.

Held

The Court quashed and set aside the impugned order dated February 13, 2021, passed by the Additional Commissioner of State Tax (Appeal), and the order dated March 7, 2020, passed by the Joint Commissioner of State Tax, along with the summary of order in Form GST DRC-07 for the tax period January 2019. The Court found that the orders were bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the absence of sufficient reasons in the ex parte orders. The Court accepted the petitioner's statement that 10% of the total amount had been deposited as a prerequisite for hearing the appeal, 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 on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and preferably within two months from the petitioner's appearance. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open. The order regarding the tax period August 2019 was also implicitly set aside as part of the overall quashing of the proceedings.

Key Issues

1. Whether the order dated March 7, 2020, passed by the Joint Commissioner of State Tax under Section 74 of the BGST Act, is liable to be quashed for violation of principles of natural justice, specifically the lack of a reasonable opportunity of being heard and the absence of a speaking order? 2. Whether the appeal filed by the petitioner before the Additional Commissioner of State Tax (Appeal) was wrongly dismissed in limine on the ground of delay, considering the prevailing COVID-19 restrictions? 3. Whether the order dated Nil for the tax period August 2019, passed under Section 74(9) of the BGST Act, is liable to be quashed? Petitioner's Arguments: The petitioner argued that the initial order was passed without providing a fair opportunity to present their case and that the appellate authority erred in dismissing the appeal solely on the basis of delay, which was attributable to COVID-19 restrictions. They also contended that the orders lacked proper reasoning. 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 a fresh decision on merits.