Mr. Ajay Kumar-Proprietor Maa Enterprises vs. The State Of Bihar

Facts

The petitioner, Mr. Ajay Kumar, proprietor of Maa Enterprises, filed a writ petition before the Patna High Court challenging an ex parte order dated January 10, 2022, passed by the Assistant Commissioner of State Tax, Bhagalpur. This order, along with a Summary of Order in Form GST DRC-07, was issued without sufficient opportunity for the petitioner to present their case. The petitioner contended that the order was bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient reasoning for the determined amount due. The Revenue stated they had no objection to the matter being remanded for fresh decision on merits, with no coercive steps taken against the petitioner during the pendency.

Held

The Court held that the impugned order dated January 10, 2022, passed by the Assistant Commissioner of State Tax, Bhagalpur, was bad in law for two primary reasons: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing afforded to the petitioner, and (b) the order being ex parte in nature without sufficient reasoning to decipher how the officer determined the amount due. The Court found that all issues of fact and law ought to have been dealt with, even in ex parte proceedings, as such orders entail civil consequences. Consequently, the Court quashed and set aside the impugned order and the Summary of Order in Form GST DRC-07. The Court directed the petitioner to deposit twenty percent of the demanded amount within four weeks, without prejudice to the rights of the parties. The bank accounts of the petitioner were to be de-frozen immediately. The petitioner was directed to appear before the Assessing Authority on January 2, 2023, and the Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording opportunities 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.

Key Issues

1. Whether the order dated January 10, 2022, passed by the Assistant Commissioner of State Tax, Bhagalpur, is liable to be quashed on the grounds of violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing afforded to the petitioner? 2. Whether the ex parte order, which allegedly lacks sufficient reasoning for the determination of the amount due, is bad in law? Petitioner's Arguments: The petitioner argued that the impugned order was ex parte and passed in violation of the principles of natural justice, as they were not afforded sufficient time or opportunity to represent their case. They also contended that the order lacked adequate reasoning to justify the amount determined as due. The petitioner sought to quash the order and summary of order. Revenue's Arguments: The Revenue stated that they had no objection to the matter being remanded to the Assessing Authority for deciding the case afresh on merits. They also agreed that no coercive steps should be taken against the petitioner during the pendency of the case.