M/S Royal Enterprises vs. The State Of Bihar, Through The Chief Secretary

Held

The High Court quashed and set aside the assessment order dated August 17, 2019, and the consequential composite notice to the third party dated February 9, 2020. The Court found that the order was bad in law due to violations of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner. The Court also noted that the ex parte order did not provide sufficient reasons for determining the amount due. The Court directed the petitioner to deposit ten percent of the total amount demanded (if not already deposited) and an additional ten percent of the demand within four weeks, without prejudice to the rights of the parties. The bank accounts of the petitioner were ordered to be de-frozen. The petitioner was directed to appear before the Assessing Authority on August 9, 2021, for a fresh decision on merits after complying with natural justice principles. The Assessing Authority was directed to decide the case expeditiously, preferably within two months of the petitioner's appearance, and 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 and all issues were left open.

Facts

The petitioner, M/s Royal Enterprises, filed a writ petition challenging an assessment order dated August 17, 2019, issued under Section 62(1) of the Bihar Goods and Services Tax Act, 2017, and a consequential composite notice to a third party dated February 9, 2020, issued under Section 79(1)(c) of the Act. The petitioner contended that a valid return along with requisite taxes for February 2019 had already been filed. The revenue argued that the petitioner had an alternative remedy of appeal. The High Court, however, decided to interfere notwithstanding the statutory remedy due to alleged violations of natural justice and lack of sufficient reasoning in the ex parte order.

Key Issues

1. Whether the assessment order dated August 17, 2019, issued under Section 62(1) of the Bihar Goods and Services Tax Act, 2017, is liable to be quashed and set aside on the grounds of violation of principles of natural justice and lack of sufficient reasoning, despite the availability of an alternative statutory remedy of appeal? Petitioner's contentions: The petitioner argued that the assessment order was bad in law because it was passed ex parte without affording a fair opportunity of hearing and lacked sufficient reasoning. The petitioner also stated that a valid return and taxes for February 2019 had been filed. Revenue's contentions: The revenue contended that the petitioner had an equally alternative efficacious remedy of filing an appeal under the provisions of the Bihar Goods and Services Tax Act, 2017.