M/S S.S. Diagnostics And Surgical vs. The State Of Bihar

Held

The Court held that the impugned order dated 31.03.2022, passed by the Assistant Commissioner of State Taxes, Patna North Circle, Patna, was bad in law due to a violation of the principles of natural justice, specifically the fair opportunity of hearing. The Court noted that no sufficient time was afforded to the petitioner to represent their case, and the order was passed ex parte without assigning sufficient reasons for determining the amount due. Consequently, the Court quashed and set aside the impugned order. The Court directed the petitioner to deposit 20% of the demanded amount within four weeks, which would be without prejudice to the parties' rights and subject to the final order of the Assessing Officer. The Court also ordered the de-freezing of the petitioner's bank accounts and directed the Assessing Authority to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all concerned, and passing a speaking order with reasons within two months from the petitioner's appearance. No opinion was expressed on the merits of the case, and all issues were left open.

Facts

The petitioner, M/s S.S. Diagnostics and Surgical, filed a writ petition challenging an order dated 31.03.2022 passed by the Assistant Commissioner of State Taxes, Patna North Circle, Patna. This order, along with a Summary of Order (Demand Notice) in Form GST DRC-07, raised a demand of Rs. 5,37,498/-. The petitioner contended that the order was passed in violation of the principles of natural justice, specifically without issuing a show cause notice and affording an opportunity of hearing. The revenue, represented by the learned counsel for the State, had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps to be taken against the petitioner during the pendency of the case.

Key Issues

1. Whether the impugned order dated 31.03.2022, passed under Section 73(9) of the Bihar GST Act, 2017, is liable to be quashed for being in violation of the principles of natural justice, specifically for lack of a show cause notice and an opportunity of hearing, as argued by the petitioner? 2. Whether an opportunity of hearing should have been afforded to the petitioner before passing the impugned order imposing penalty and interest, as contended by the petitioner? The petitioner argued that the order was passed ex parte without providing sufficient time or opportunity to represent their case and that the order lacked sufficient reasoning to determine the amount due. The revenue did not contest these points and agreed to a remand for a fresh decision on merits.