M/S Singh Construction vs. The State Of Bihar

Facts

The petitioner, M/s Singh Construction, filed a writ petition challenging an order dated February 28, 2022, passed by the Additional Commissioner of State Tax (Appeals), Patna. This order rejected the petitioner's appeals against orders dated March 5, 2020, and March 7, 2020, passed by the Deputy Commissioner of State Tax, Patna South Circle. The petitioner contended that the appellate order was passed ex parte and in violation of the principles of natural justice, as they were not afforded sufficient time or opportunity to present their case. The revenue, through its counsel, agreed to a remand of the matter to the assessing authority for a fresh decision on merits, without coercive steps against the petitioner during the pendency of the case.

Held

The Court held that the impugned appellate order dated February 28, 2022, was bad in law due to two primary reasons: (a) a clear 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 order being passed ex parte without assigning sufficient reasons decipherable from the record as to how the amount due was determined. The Court found that such an order, entailing civil consequences, was passed without adjudicating the matter on the attending facts and circumstances, and that all issues of fact and law ought to have been dealt with. Consequently, the Court quashed and set aside the impugned appellate order and the original orders dated March 5, 2020, and March 7, 2020. The Court directed the petitioner to deposit 10% of the demand amount within four weeks, without prejudice to the rights of the parties. The bank accounts of the petitioner were ordered to be de-frozen immediately. The Assessing Authority was directed to decide the case afresh on merits after complying with the principles of natural justice, affording adequate opportunity to all concerned, and passing a speaking order within two months from 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 merits and all issues were left open.

Key Issues

1. Whether the impugned appellate order dated February 28, 2022, passed by the Additional Commissioner of State Tax (Appeals) is liable to be quashed and set aside for violating the principles of natural justice, specifically the right to a fair opportunity of hearing, as argued by the petitioner? 2. Whether the ex parte nature of the appellate order, which allegedly lacks sufficient reasoning for determining the amount due, renders it bad in law, as contended by the petitioner? Petitioner's Arguments: The petitioner argued that the appellate order was passed ex parte and without complying with the principles of natural justice, as they were not given adequate time to represent their case. They also argued that the order lacked sufficient reasoning to justify the determination of the amount due. Revenue's Arguments: The revenue stated that it had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits, and that no coercive steps would be taken against the petitioner during the pendency of the case.