M/S Efti Construction vs. The State Of Bihar

Facts

The petitioner, M/s EFTI Construction, challenged an order dated 28.12.2020 passed by the Additional Commissioner of State Taxes (Appeals), Tirhut Division, Muzaffarpur. This order rejected the petitioner's appeal against an order dated 03.03.2020 passed by the Assistant Commissioner of State Taxes, Motihari Circle, Motihari, and a summary of order dated 03.03.2020 in form GST DRC-07. The tax period in question is April 2019 to September 2019. The petitioner contended that the orders were ex parte and passed in violation of principles of natural justice, as they were not afforded sufficient time or a fair opportunity to present their case. The Revenue did not object to the matter being remanded for fresh decision on merits, without limitation being an impediment, and agreed that no coercive steps would be taken against the petitioner during the pendency of the case.

Held

The Court held that the impugned orders were bad in law for two primary reasons: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner to represent their case, and (b) the ex parte nature of the orders, which failed to assign sufficient reasons for determining the amount due and payable by the assessee. The Court also found that the authorities had not adjudicated the matter on the attending facts and circumstances, neglecting to deal with all issues of fact and law. Consequently, the Court quashed and set aside the impugned orders dated 28.12.2020 and 03.03.2020. The Court directed the petitioner to deposit ten percent of the total amount (if not already deposited) and an additional ten percent of the demand raised before the Assessing Officer within four weeks. Bank accounts were to be de-frozen. The petitioner was directed to appear before the Assessing Authority on 23.12.2022, and the Assessing Authority was directed to decide the case on merits expeditiously, preferably within two months, after complying with the principles of natural justice, affording adequate opportunity, and passing a speaking order. 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 merits and all issues were left open.

Key Issues

1. Whether the impugned orders, passed by the Assistant Commissioner of State Taxes and the Additional Commissioner of State Taxes (Appeals), are bad in law due to violation of the principles of natural justice, specifically the right to a fair opportunity of hearing? (Question of law) 2. Whether the ex parte orders, which allegedly do not assign sufficient reasons for determining the amount due and payable by the assessee, are legally sustainable? (Question of law) Petitioner's Arguments: The petitioner argued that the orders were ex parte, passed without providing adequate time for them to represent their case, thus violating the principles of natural justice. They contended that the authorities failed to adjudicate the matter on the attending facts and circumstances and did not deal with all issues of fact and law, even in ex parte proceedings. Revenue's Arguments: The Revenue, through the learned counsel for the State, stated that they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits. They further agreed that limitation would not come in the way and no coercive steps would be taken against the petitioner during the pendency of the case.