M/S Sky S Mart vs. The State Of Bihar

Held

The Court held that the impugned order dated 30.11.2021, passed by the Assistant Commissioner of State Taxes, Patna City Circle, was bad in law due to a clear violation of the principles of natural justice. 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. Such an order, entailing civil consequences, cannot be sustained. 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, without prejudice to the parties' rights. The bank account of the petitioner was ordered to be de-frozen. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording opportunity for hearing and submission of documents, and passing a speaking order within two months of the petitioner's appearance. 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, leaving all issues open.

Facts

The petitioner, M/s Sky S Mart, a proprietorship firm, filed a writ petition before the Patna High Court challenging an order dated 30.11.2021 passed by the Assistant Commissioner of State Taxes, Patna City Circle. This order, bearing reference No. ZD101121015399Z, imposed a tax demand of Rs. 4,61,939/-, including interest and penalty. The petitioner contended that this order was passed in violation of the principles of natural justice as no show cause notice was issued, and their bank account was attached for recovery. The revenue, represented by learned counsel, stated they had no objection if the matter was remanded to the Assessing Authority for fresh adjudication on merits, with no coercive steps taken against the petitioner during the pendency.

Key Issues

1. Whether the impugned order dated 30.11.2021, passed by the Assistant Commissioner of State Taxes, Patna City Circle, is liable to be quashed for violation of the principles of natural justice, specifically the principles of natural justice and the requirement of a show cause notice under Section 73(9) of the Bihar GST Act, 2017? Petitioner's arguments: The petitioner argued that the order was passed without issuing any show cause notice, thereby violating the principles of natural justice and fair opportunity of hearing. They also sought the release of their attached bank account. The petitioner relied on the principle that orders entailing civil consequences must adhere to natural justice. Revenue's arguments: The Revenue did not contest the quashing of the order and agreed to a remand for fresh adjudication, stating no objection to the matter being decided on merits and no coercive steps being taken against the petitioner during the pendency of the fresh proceedings.