M/S G. Power Solution vs. The State Of Bihar

Held

The Court quashed and set aside the impugned order dated January 28, 2021, passed by the Assistant Commissioner of State Tax, Patna North Circle, and the consequential Summary of Order in Form GST DRC-07. The Court found the order to be bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the order which did not provide sufficient reasons for determining the amount due. The Court directed the petitioner to deposit 20% of the demanded amount within four weeks, without prejudice to the rights and contentions of the parties. The bank accounts of the petitioner were ordered to be de-frozen/de-attached immediately. The Assessing Authority was directed 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 coercive steps were to be taken against the petitioner during the assessment period. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open.

Facts

The petitioner, M/s G. Power Solution, a proprietorship firm, challenged an order dated January 28, 2021, passed by the Assistant Commissioner of State Tax, Patna North Circle. This order, issued under Section 73(9) of the Bihar GST Act, 2017, along with a Summary of Order in Form GST DRC-07, raised a demand of Rs. 5,47,538/-. The petitioner contended that the order was passed in violation of the principles of natural justice, specifically without issuing a show cause notice and without affording an opportunity of hearing. The revenue, represented by learned counsel, had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, and agreed that no coercive steps would be taken against the petitioner during the pendency of the case.

Key Issues

1. Whether the impugned order dated January 28, 2021, passed by the Assistant Commissioner of State Tax, Patna North Circle, 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 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? Petitioner's Arguments: The petitioner argued that the order was passed in violation of the principles of natural justice, as no show cause notice was issued and no opportunity of hearing was provided. They sought to quash the order and restrain recovery of the demand during the pendency of the writ petition. 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 deciding the case afresh on merits. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.