M/S S.S. Diagnostics And Surgical, A Proprietorship Firm vs. The State Of Bihar

Held

The Court quashed and set aside the impugned order dated 31.03.2022 passed by the Assistant Commissioner of State Taxes and the consequential summary of order (Demand Notice) in Form GST DRC-07 for the period 2018-19. The Court found the order to be bad in law due to a clear 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 demand. The Court also noted that the authorities had not adjudicated the matter on the attending facts and circumstances. The Court directed the petitioner to deposit 20% of the demanded amount within eight weeks, without prejudice to the rights of the parties. The bank account(s) of the petitioner were to be de-frozen immediately. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording an opportunity of hearing and allowing parties to submit documents, and to pass a speaking order within two months of the petitioner's appearance. No coercive steps were to be taken during the pendency of the assessment. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open.

Facts

The petitioner, M/s S.S. Diagnostics and Surgical, a proprietorship firm, filed a writ petition before the Patna High Court challenging an order dated 31.03.2022 passed by the Assistant Commissioner of State Taxes, Patna North Circle. This order, issued under Section 73(9) of the Bihar GST Act, 2017, along with a consequential summary of order in Form GST DRC-07, imposed a demand for the period 2018-19. The petitioner contended that the order was passed ex parte, in violation of the principles of natural justice, as no show cause notice was issued and no opportunity of hearing was afforded. The revenue, represented by the State, stated it had no objection if the matter was 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 order dated 31.03.2022 passed by the Assistant Commissioner of State Taxes, Patna North Circle, for the period 2018-19, is liable to be quashed for being in violation of the principles of natural justice, specifically for lack of issuance of a show cause notice and denial of an opportunity of hearing to the petitioner, as contemplated under Section 73(9) of the Bihar GST Act, 2017? Petitioner's Contention: The petitioner argued that the impugned order was passed ex parte without providing any show cause notice or affording a fair opportunity of hearing, thereby violating fundamental principles of natural justice. They sought to restrain the respondents from recovering the impugned demand during the pendency of the writ petition. Revenue's Contention: 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, and that no coercive steps would be taken against the petitioner during the pendency of the case.