M/S. Livguard Energy Technologies PVT. LTD. vs. The State Of Bihar

Facts

The petitioner, M/s. Livguard Energy Technologies Pvt. Ltd., challenged an order dated 24.02.2021 passed by the Assistant Commissioner of State Taxes, Bihar. This order, under the BGST Act, 2017, and in Form GST DRC-07, raised a demand of Rs. 86,36,856/- for the tax period April 2019 to March 2020. The petitioner contended that the order was passed ex parte, in violation of principles of natural justice, as they were not afforded a fair opportunity of hearing and sufficient time to present their case. The revenue, represented by the State of Bihar, agreed to a remand of the matter 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.

Held

The Court held that the impugned order dated 24.02.2021, passed by the Assistant Commissioner of State Taxes, was bad in law on two grounds: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner, and (b) the order being passed ex parte without sufficient reasoning to justify the demand. Consequently, the Court quashed and set aside the impugned order. The Court directed the petitioner to deposit 20% of the demanded amount within four weeks, without prejudice to the rights of the parties. The bank accounts of the petitioner were ordered to be de-frozen. The Assessing Authority was directed 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 with reasons 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 impugned order dated 24.02.2021, passed by the Assistant Commissioner of State Taxes, is bad in law due to violation of the principles of natural justice, specifically the right to a fair opportunity of hearing, as argued by the petitioner? 2. Whether the ex parte order, which allegedly does not provide sufficient reasons for determining the amount due, is liable to be quashed, as contended by the petitioner? The petitioner argued that the order was passed ex parte without sufficient time for them to represent their case and lacked adequate reasoning for the demand. The revenue did not contest these points and agreed to a remand for a fresh decision on merits, subject to certain conditions. The revenue did not present any arguments against the petitioner's claims but consented to the proposed course of action.