Raj Kishore Sharma vs. The Union Of INDIA

Held

The Court held that the impugned order dated February 8, 2021, and the consequential demand issued under Form DRC-07 dated February 9, 2021, were bad in law due to violations of the principles of natural justice. Specifically, the Court found that the petitioner was not afforded a fair opportunity of hearing and was not given sufficient time to present his case. Furthermore, the ex parte order did not provide sufficient reasons for determining the amount due. On these grounds alone, the Court quashed and set aside the impugned order and demand. The Court directed the petitioner to deposit ten percent of the total amount (if not already deposited) before the next date and additionally deposit another ten percent of the demand within four weeks, without prejudice to the parties' rights. The Court also ordered the de-freezing of the petitioner's bank accounts. The petitioner was directed to appear before the Assessing Authority on August 31, 2021, for the authority to decide the case on merits after complying with principles of natural justice and affording adequate opportunity to all concerned. No coercive steps were to be taken against the petitioner during this period. The Assessing Authority was directed to pass a speaking order expeditiously, preferably within two months. Liberty was reserved for the petitioner to challenge the vires of Section 16(4) of the GST Act and Rule 61(5) of the GST Rules in separate proceedings.

Facts

The petitioner, Raj Kishore Sharma, filed a writ petition before the Patna High Court challenging an order dated February 8, 2021, passed by the Assistant Commissioner of State Taxes, East Circle, Muzaffarpur, and a consequential demand issued under Form DRC-07 dated February 9, 2021. The petitioner contended that the order was passed ex parte, without sufficient opportunity for him to present his case, and lacked sufficient reasoning. The Revenue, represented by the Additional Solicitor General and Additional Advocate General, stated they 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. The Court accepted this statement.

Key Issues

1. Whether the impugned order dated February 8, 2021, and the consequential demand notice dated February 9, 2021, are liable to be quashed on the ground 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 his case? 2. Whether the ex parte order, which allegedly lacks sufficient reasons for determining the amount due and payable by the assessee, is bad in law? Petitioner's Arguments: The petitioner argued that the order was passed ex parte, violating the principles of natural justice by not providing adequate time for hearing. He also contended that the order lacked sufficient reasoning for the determined demand. Revenue's Arguments: The Revenue stated they had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.