Bihar Risk Management Consultancy Private Limited vs. The State Of Bihar

Held

The Court quashed the appellate order dated August 20, 2020, and the ex parte assessment order dated August 31, 2019. Regarding the delay in filing the appeal, the Court condoned the delay in view of the COVID-19 pandemic and the directions issued by the Apex Court in Suo Motu Writ (Civil) No. 3 of 2020. The assessment order was quashed for having been passed without following the principles of natural justice, as it entailed civil consequences without adequate opportunity of hearing or assigning reasons. The Court did not express any opinion on the merits of the case. The matter was remanded for fresh consideration, with directions for the petitioner to deposit Rs. 3 lacs by March 9, 2021, and appear before the assessing authority on the same date with additional material. The assessing authority was directed to decide the matter on merits, in compliance with principles of natural justice, by May 3, 2021. Liberty was reserved for parties to take recourse to other remedies. The Court clarified that any excess deposit would be refunded. The Court explicitly stated that it had not expressed any opinion on the merits and quashed the order solely on the ground of violation of the principles of natural justice.

Facts

The petitioner, Bihar Risk Management Consultancy Private Limited, filed a writ petition challenging an appellate order dated August 20, 2020, which rejected their appeal, and an ex parte assessment order dated August 31, 2019, passed by the Deputy Commissioner of State Taxes. The petitioner argued that their appeal was filed within the limitation period from the date of conscious knowledge of the assessment order, and that the Limitation Act, 1963, should apply. They also contended that a delay of three days in filing their return for June 2019 was negligible and should have been waived, and that the assessment order, being best judgment assessment, was regulatory and not penal. The petitioner sought to quash both orders and for a declaration that their appeal was within time and that the assessment order was illegal.

Key Issues

1. Whether the appeal preferred by the petitioner on 23.06.2020 was within the limitation prescribed under Section 107 of the Goods and Services Tax Act, 2017, from 05.03.2020, the date of conscious knowledge of the impugned order dated 31.08.2019, and if so, whether the rejection of the appeal on grounds of delay was illegal? Petitioner's contention: The appeal was within limitation from the date of conscious knowledge. Section 107 of the GST Act allows for condonation of delay, and Section 5 of the Limitation Act, 1963, read with Section 29(2) of the same Act, should apply, extending the limitation period. Revenue's contention: Not recorded in the judgment. 2. Whether the ex parte order of assessment dated 31.08.2019, passed under Section 62(1) of the GST Act, 2017, was passed without following the principles of natural justice? Petitioner's contention: The assessment order was passed without affording an adequate opportunity of hearing or assigning any reason, thus violating principles of natural justice and having civil consequences. Revenue's contention: Not recorded in the judgment. 3. Whether Section 62(2) of the GST Act, 2017, is directory and not mandatory, and if a valid return is filed, it shall replace the best judgment assessment irrespective of the bar of limitation under Section 62(2)? Petitioner's contention: Section 62(2) is directory, and a valid return filed under Section 39 read with Section 47 of the Act should replace the best judgment assessment.