M/S Royal Enterprises vs. The State Of Bihar

Held

The Court held that notwithstanding the existence of a statutory remedy of appeal, it was not precluded from interfering with the impugned order if it was ex facie bad in law. The Court found two primary reasons for interference: (a) a violation of the principles of natural justice, specifically that the petitioner was not afforded sufficient time to present their case, and (b) the order was passed ex parte without sufficient reasoning to determine the amount due. The Court emphasized that an ex parte order passed in violation of natural justice entails civil consequences. Consequently, the Court quashed and set aside the impugned order dated September 14, 2019, and the consequential Composite Notice dated February 9, 2020. The Court also directed the de-freezing of the petitioner's bank accounts, accepted the petitioner's undertaking to deposit an additional 10% of the demand within four weeks, and directed the Assessing Officer to pass a fresh order after affording adequate opportunity to all concerned, including the petitioner, and to decide the matter on merits expeditiously, preferably within two months from the petitioner's appearance. The Court explicitly stated that it had not expressed any opinion on the merits of the case, leaving all issues open.

Facts

The petitioner filed a writ petition challenging an order dated September 14, 2019, passed by the Assistant Commissioner of State Tax, Bhagalpur Circle, and a consequential Composite Notice to Third Person dated February 9, 2020, issued under Section 79(1)(c) of the Bihar Goods and Services Tax Act, 2017. The revenue contended that the petitioner had an alternative efficacious remedy of filing an appeal. The petitioner argued that the impugned order was bad in law due to a violation of the principles of natural justice, specifically a lack of sufficient opportunity to present their case, and that the order was passed ex parte without sufficient reasoning to determine the amount due. The court noted that the petitioner had already deposited 10% of the disputed amount.

Key Issues

1. Whether the impugned order dated September 14, 2019, and the consequential notice dated February 9, 2020, are liable to be quashed and set aside on the grounds of violation of the principles of natural justice, specifically the lack of adequate opportunity for the petitioner to be heard and the ex parte nature of the order without sufficient reasoning, despite the existence of an alternative statutory remedy of appeal under the Bihar Goods and Services Tax Act, 2017. Petitioner's Arguments: The petitioner argued that the order was bad in law due to a violation of the principles of natural justice, as they were not afforded sufficient time to represent their case. They further contended that the order was passed ex parte and lacked sufficient reasoning to justify the determined amount due. The petitioner relied on the principle that orders entailing civil consequences must adhere to natural justice. Revenue's Arguments: The revenue argued that the petitioner had an equally alternative and efficacious remedy of filing an appeal under the provisions of the Bihar Goods and Services Tax Act, 2017, implying that the writ petition was not maintainable.