Sujeet Kumar Singh vs. The State Of Bihar
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The petitioner, Sujeet Kumar Singh, challenged two notices issued by the GST authorities. The first notice, dated March 4, 2020, from the Assistant Commissioner of State Tax, demanded Rs. 7,67,767.96 for the tax period October 2018-March 2019, under Section 74 of the GST Act, 2017. The second notice, dated March 11, 2021, from the Joint Commissioner of State Tax, directed the State Bank of India to attach the petitioner's account for Rs. 7,15,364, under Section 79 of the GST Act, 2017. The petitioner contended that these notices were issued without affording him a proper opportunity of hearing and that the orders were passed ex parte without sufficient reasoning. The revenue, through its counsel, agreed to a remand of the matter to the Assessing Authority for fresh decision, with no coercive steps to be taken against the petitioner during the pendency of the case.
Held
The Court held that the impugned notices dated March 4, 2020, and March 11, 2021, were bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing afforded to the petitioner. The Court noted that the orders were passed ex parte and did not provide sufficient reasons for determining the amount due. Consequently, the Court quashed and set aside both notices. The Court directed the de-freezing of the petitioner's bank account. The petitioner was directed to deposit an additional ten percent of the demand raised before the Assessing Officer within four weeks, without prejudice to the rights of the parties. 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 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, and all issues were left open.
Key Issues
1. Whether the impugned notices dated March 4, 2020, and March 11, 2021, issued under Sections 74 and 79 of the GST Act, 2017, respectively, are liable to be quashed on the ground of violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing to the petitioner? Petitioner's Contention: The petitioner argued that the notices were issued without providing him with adequate time to present his case and that the orders were passed ex parte without sufficient reasoning to determine the amount due. This violated the principles of natural justice, leading to civil consequences. Revenue's Contention: The revenue stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, and that no coercive steps would be taken against the petitioner during the pendency of the case. The revenue did not explicitly argue against the petitioner's claim of violation of natural justice but agreed to a remand.
Sections Cited
Section 74, Section 79
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Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) (The proceedings of the Court are being conducted by Hon’ble the Chief Justice/Hon’ble Judges through Video Conferencing from their residential offices/residences. Also the Advocates and the Staffs joined the proceedings through Video Conferencing from their residences/offices.) Date : 07-07-2021 Petitioner has prayed for the following relief(s): “(i) Issuance of writ of certiorari for quashing the notíce dated 04.03.2020 (Annexure-2) for the financial year 2018- 2019 by which the petitioner has been advised to pay Rs. 767767.96 as tax, interest and penalty.
2/7 ii) Issuance of writ in the nature of certiorari for quashing of notice dated 11.03.2021 (Annexure-3) issued under section 79 of the Act to the State Bank of India for attaching the account of the petitioner for payment of Rs. 715364. (iii) For any other consequential relief/reliefs for which the petitioner is entitle by this Hon'ble Court in the facts and circumstances of the present case.” It is brought to our notice that vide impugned notice dated 04.03.2020, issued by the Respondent No. 3 namely the Assistant Commissioner of State Tax, Kadamkuan Circle, Patna in GSTIN/ID: 10BLQPS2379G1ZU, under Section 74 of GST Act, 2017 under Reference No. ZA100323334401U for the tax period October 2018-March 2019 and notice dated 11.03.2021 passed by Respondent No. 2, namely Joint Commissioner of State Tax, Kadamkuan Circle, Patna issued under Section 79 of the GST Act, 2017 the account of the petitioner has been attached allegedly without noticing the petitioner. 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 3/7 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 order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. As such, on this short ground alone, we dispose of the present writ petition in the following mutually agreeable terms: (a) We quash and set aside the impugned notice dated 04.03.2020, issued by the Respondent No. 3 namely the Assistant Commissioner of State Tax, Kadamkuan Circle, Patna in GSTIN/ID: 10BLQPS2379G1ZU, under Section 74 4/7 of GST Act, 2017 under Reference No. ZA100323334401U for the tax period October 2018-March 2019 and notice dated 11.03.2021 passed by Respondent No. 2, namely Joint Commissioner of State Tax, Kadamkuan Circle, Patna issued under Section 79 of the GST Act, 2017; (b) We accept the statement of the petitioner that ten per cent of the total amount, being condition prerequisite for hearing of the appeal, already stands deposited. If that were so, well and good. However, if the amount is not deposited for whatever reason(s), same shall be done before the next date; (c) Further the petitioner undertakes to additionally deposit ten per cent of the amount of the demand raised before the Assessing Officer. This shall be done within four weeks. (d) 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 deposit is in excess, the same shall be refunded within two months from the date of passing of the order; (e) We also direct for de-freezing/de-attaching of the 5/7 bank account(s) of the writ-petitioner, if attached in reference to the proceedings, subject matter of present petition. This shall be done immediately. (f) Petitioner undertakes to appear before the Assessing Authority on 9th of August, 2021 at 10:30 A.M., if possible through digital mode; (g) The Assessing Authority shall decide the case on merits after complying with the principles of natural justice; (h) Opportunity of hearing shall be afforded to the parties to place on record all essential documents and materials, if so required and desired; (i) During pendency of the case, no coercive steps shall be taken against the petitioner. (j) The Assessing Authority shall pass a fresh order only after affording adequate opportunity to all concerned, including the writ petitioner; (k) Petitioner through learned counsel undertakes to fully cooperate in such proceedings and not take unnecessary adjournment; (l) The Assessing Authority shall decide the case on merits expeditiously, preferably within a period of two 6/7 months from the date of appearance of the petitioner; (m) The Assessing Authority shall pass a speaking order, assigning reasons, copy whereof shall be supplied to the parties; (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; (r) If possible, proceedings during the time of current Pandemic [Covid-19] be conducted through digital mode; The instant petition sands disposed of in the aforesaid terms. Interlocutory Application(s), if any, also stands disposed of.
7/7 Learned counsel for the respondents undertakes to communicate the order to the appropriate authority through electronic mode.
P.K.P./- (Sanjay Karol, CJ) ( S. Kumar, J) AFR/NAFR CAV DATE Uploading Date 16.07.2021 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.