M/S G. Power Solution vs. The State Of Bihar
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The petitioner, M/s G. Power Solution, a proprietorship firm, filed a writ petition before the Patna High Court challenging an order dated 21.03.2020 passed by the Assistant Commissioner of State Tax, Patna North Circle, under Section 73(9) of the Bihar GST Act, 2017, for the financial year 2018-19. The petitioner also challenged the summary of the order in Form GST DRC-07 dated 23.03.2020 and a notice to a third person under Section 79(1)(c) in Form GST DRC-13 dated 22.02.2022, issued by the Joint Commissioner of State Tax. The petitioner contended that the order was ex parte and passed in violation of the principles of natural justice, as insufficient time was provided for representation. The Revenue stated it had no objection to the matter being remanded for fresh decision on merits.
Held
The Court held that the impugned order dated 21.03.2020, the summary of order in Form GST DRC-07 dated 23.03.2020, and the notice to a third person under Section 79(1)(c) in Form GST DRC-13 dated 22.02.2022, were bad in law due to a violation of the principles of natural justice. The Court found that the petitioner was not afforded a fair opportunity of hearing and insufficient time was given to represent its case. The order was passed ex parte and lacked sufficient reasoning. Consequently, the Court quashed and set aside the impugned orders. The Court directed the petitioner to deposit twenty percent of the demand raised within four 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 adequate opportunity to all concerned, and passing a speaking order within two months from the petitioner's appearance. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open. Liberty was reserved for the petitioner to challenge the vires of Section 16(4) of the GST Act separately.
Key Issues
1. Whether the impugned order dated 21.03.2020, the summary of order in Form GST DRC-07 dated 23.03.2020, and the notice to a third person under Section 79(1)(c) in Form GST DRC-13 dated 22.02.2022, are liable to be quashed and set aside on the grounds of violation of principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner to represent its case, as contemplated under the relevant provisions of the Bihar GST Act, 2017. Petitioner's Contention: The petitioner argued that the order was ex parte, passed without providing sufficient time for them to present their case, thereby violating the principles of natural justice. They contended that the order lacked sufficient reasoning to determine the amount due. Revenue's Contention: The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits.
Sections Cited
Section 73(9), Section 79(1)(c), Section 16(4)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 17-08-2022 Heard learned counsel for the parties. Petitioner has prayed for the following relief(s):- 2/7 Petitioner has prayed for quashing of the impugned order dated 21.03.2020 passed by the respondent Assistant Commissioner of State Tax, Patna North Circle, Patna under Section 73(9) of Bihar GST Act, 2017 for the F.Y. 2018-19 (Annexure-2); Summary of the order in Form GST DRC-07 dated 23.03.2020 in Reference No.
3/7 ZA100320020654F (Annexure-3) and the notice to a third person under Section 79(1)(c) in Form GST DRC-13, issued by the Joint Commissioner of State Tax, Patna North Circle, Patna dated 22.02.2022 (Annexure-4). The order appear to be ex parte in nature. Learned counsel for the Revenue, states that he has no objection if the matter is remanded to the Assessing Authority for deciding the case afresh. Also, the case shall be decided on merits. Also, during pendency of the case, no coercive steps shall be taken against the petitioner. Statement accepted and taken on record. However, having heard learned counsel for the parties as also perused the record made available, we are of the considered view that this Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The 4/7 order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. As such, we dispose of the present writ petition in the following mutually agreeable terms: (a) We quash and set aside the impugned order dated 21.03.2020 passed by the respondent Assistant Commissioner of State Tax, Patna North Circle, Patna under Section 73(9) of Bihar GST Act, 2017 for the F.Y. 2018-19 (Annexure-2); Summary of the order in Form GST DRC-07 dated 23.03.2020 in Reference No. ZA100320020654F (Annexure-3) and the notice to a third person under Section 79(1)(c) in Form GST DRC-13, issued by the Joint Commissioner of State Tax, Patna North Circle, Patna, dated 22.02.2022 (Annexure-4); (b) The petitioner undertakes to deposit twenty per cent of the amount of the demand raised before the Assessing Officer. This shall be done within four weeks. (c) This deposit shall be without prejudice to the respective rights and contention of the parties and subject to the order passed by the Assessing Officer. However, if it is ultimately found that the petitioner’s 5/7 deposit is in excess, the same shall be refunded within two months from the date of passing of the order; (d) We also direct for de-freezing/de-attaching of the bank account(s) of the writ-petitioner, if attached in reference to the proceedings, subject matter of present petition. This shall be done immediately. (e) Petitioner undertakes to appear before the Assessing Authority on 12th of September, 2022 at 10:30 A.M., if possible through digital mode; (f) The Assessing Authority shall decide the case on merits after complying with the principles of natural justice; (g) Opportunity of hearing shall be afforded to the parties to place on record all essential documents and materials, if so required and desired; (h) During pendency of the case, no coercive steps shall be taken against the petitioner. (i) The Assessing Authority shall pass a fresh order only after affording adequate opportunity to all concerned, including the writ petitioner; (j) Petitioner through learned counsel undertakes to 6/7 fully cooperate in such proceedings and not take unnecessary adjournment; (k) The Assessing Authority shall decide the case on merits expeditiously, preferably within a period of two months from the date of appearance of the petitioner; (l) The Assessing Authority shall pass a speaking order assigning reasons, copy whereof shall be supplied to the parties; (m) Liberty reserved to the petitioner to challenge the vires of Section 16(4) of GST Act by way of separate proceedings. (n) Liberty reserved to the petitioner to challenge the order, if required and desired; (o) Equally, liberty reserved to the parties to take recourse to such other remedies as are otherwise available in accordance with law; (p) We are hopeful that as and when petitioner takes recourse to such remedies, before the appropriate forum, the same shall be dealt with, in accordance with law, with a reasonable dispatch; (q) We have not expressed any opinion on merits and all issues are left open;
7/7 (r) If possible, proceedings during the time of current Pandemic [Covid-19] be conducted through digital mode; The instant petition stands disposed of in the aforesaid terms. Interlocutory Application(s), if any, shall stand disposed of.
Amrendra/PKP (Sanjay Karol, CJ) (S. Kumar, J) AFR/NAFR CAV DATE Uploading Date 18.08.2022 Transmission Date
Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.