Rohan Raj vs. The State Of Bihar

Facts

The petitioner, Rohan Raj, proprietor of Saanvi Automobiles, challenged an assessment order-in-original dated 18.02.2021 and a related order dated 27.02.2021, along with a consequential demand notice in Form GST DRC-07, issued by the Assistant Commissioner of State Tax. The impugned orders levied an amount of Rs. 7,66,411.32, including interest and penalty, for the period April 2019 to March 2020. The petitioner contended that these orders were passed ex parte and in violation of the principles of natural justice, as insufficient time was afforded for representation. It was stated that the entire demanded amount had been deposited/recovered. The Revenue had no objection to the matter being remanded for fresh decision.

Held

The Court held that the assessment order-in-original dated 18.02.2021, the order dated 27.02.2021, and the consequential demand notice in Form GST DRC-07 were bad in law due to 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 orders being passed ex parte without assigning sufficient reasons for determining the amount due. The Court found that the authorities had not adjudicated the matter on the attending facts and circumstances, and all issues of fact and law ought to have been dealt with. Consequently, the Court quashed and set aside the impugned orders. The Court directed the de-freezing of the petitioner's bank accounts, accepted the petitioner's undertaking to appear before the Assessing Authority on 02.11.2022, and instructed the Assessing Authority to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order within two months. The deposit made by the petitioner was to be without prejudice, with a refund to be issued if found in excess. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open. The ratio decidendi is that orders passed in violation of natural justice, particularly without adequate opportunity of hearing and sufficient reasoning, are liable to be set aside, even if a statutory remedy exists.

Key Issues

1. Whether the assessment order-in-original dated 18.02.2021, the order dated 27.02.2021, and the consequential demand notice in Form GST DRC-07, passed by the Assistant Commissioner of State Tax, are liable to be quashed and set aside on the grounds of violation of principles of natural justice and being passed ex parte without sufficient reasons, as argued by the Petitioner? 2. Whether the Court should interfere despite the existence of statutory remedies, given the alleged procedural irregularities and lack of proper adjudication on facts and circumstances, as contended by the Petitioner? Petitioner's Arguments: The Petitioner argued that the orders were passed ex parte, violating the principles of natural justice by not affording a fair opportunity of hearing and sufficient time for representation. The Petitioner also contended that the orders lacked sufficient reasoning for determining the amount due. The Petitioner relied on the fact that the entire demand had been deposited. Revenue's Arguments: The Revenue stated that they 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.