M/S Durga Trading Company vs. The State Of Bihar

Facts

The petitioner, M/s Durga Trading Company, filed a writ petition challenging multiple orders passed by various State Tax authorities. These orders included those from the Additional Commissioner of State Taxes (Appeals), the Assistant Commissioner of State Taxes, and the Joint Commissioner of State Taxes. The petitioner contended that these orders were passed ex parte and in violation of the principles of natural justice, specifically citing a lack of sufficient opportunity to present their case and inadequate reasoning for the determined amounts due. The revenue, represented by the State, stated it had no objection to the matter being remanded for fresh decision on merits, with no coercive steps taken against the petitioner during the pendency of the case.

Held

The Court held that the impugned orders were liable to be quashed on two primary 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 to present their case, and (b) the ex parte nature of the orders, which failed to provide sufficient reasoning for the determination of the amounts 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, even in ex parte proceedings. Consequently, the Court quashed and set aside all the impugned orders. The Court also noted the petitioner's statement regarding the deposit of ten percent of the total amount and directed further deposit of another ten percent of the demand within four weeks, without prejudice to the rights of the parties. The Court further directed the de-freezing of the petitioner's bank accounts, the petitioner's appearance before the Assessing Authority, and that the Assessing Authority decide the case on merits, complying with principles of natural justice, affording adequate opportunity, and passing a speaking order within two months. No opinion was expressed on the merits of the case.

Key Issues

1. Whether the impugned orders, passed ex parte by the revenue authorities, are liable to be quashed on the ground of violation of the principles of natural justice, specifically the right to a fair opportunity of hearing, as contemplated under the relevant provisions of the GST Act and Rules? 2. Whether the impugned orders, being ex parte, sufficiently assign reasons for determining the amount due and payable by the assessee, thereby satisfying the requirements of law? Petitioner's Arguments: The petitioner argued that the orders were passed ex parte without affording them a sufficient opportunity to represent their case. They contended that the orders lacked adequate reasoning to justify the determined tax liability, making them bad in law. The petitioner also stated that ten percent of the total amount, a prerequisite for appeal hearing, had already been deposited. Revenue's Arguments: The revenue stated that it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, subject to no coercive steps being taken against the petitioner.