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

Facts

M/s Livguard Energy Technologies Pvt. Ltd. (the petitioner) filed a writ petition before the Patna High Court challenging an order dated 24.02.2021 passed by the Assistant Commissioner of State Taxes, Patliputra Circle. This order, issued under Section 73(1) of the BGST Act, 2017, and accompanied by a summary in Form GST DRC-07, raised a demand of Rs. 46,40,289/- for the tax period 2018-19. The petitioner contended that the order was passed in violation of principles of natural justice, as they were not afforded sufficient time to present their case, and the order was passed ex parte without adequate reasoning. The Revenue, represented by its counsel, had no objection to the matter being remanded for 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 liable to be quashed and set aside. The Court found that the order was passed in violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing afforded to the petitioner, who was not given sufficient time to represent their case. Furthermore, the Court noted that the ex parte order did not assign sufficient reasons to decipher how the officer determined the amount due and payable by the assessee. The Court observed that such an order, entailing civil consequences, could be interfered with by the High Court, notwithstanding the statutory remedy. Consequently, the Court quashed 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 account(s) of the petitioner were to be de-frozen immediately. 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 with reasons. Coercive steps were prohibited during the pendency of the assessment, which was to be completed expeditiously, preferably within two months from the petitioner's appearance. 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 order dated 24.02.2021, passed by the Assistant Commissioner of State Taxes, is liable to be quashed and set aside on the grounds of violation of principles of natural justice, specifically the lack of adequate opportunity of hearing afforded to the petitioner? 2. Whether the impugned order, passed ex parte, sufficiently assigns reasons to determine the amount due and payable by the assessee as required by law? Petitioner's Contentions: The petitioner argued that the order was bad in law due to a violation of the principles of natural justice, as they were not given sufficient time to represent their case. They further contended that the order was passed ex parte and lacked sufficient reasoning to justify the determined demand. The petitioner sought to quash the impugned order. Revenue's Contentions: The Revenue stated that they had no objection if the matter was 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.