M/S Ajay Kumar Singh vs. The State Of Bihar

Facts

The petitioner, M/s Ajay Kumar Singh, a proprietorship firm, filed a writ petition challenging an order dated December 18, 2021, passed by the Additional Commissioner of State Tax (Appeal). This order had rejected the petitioner's appeal against an order dated January 17, 2021, passed by the Joint Commissioner of State Tax. The Joint Commissioner's order, along with a summary in Form GST DRC-07, was also under challenge. The petitioner contended that the appellate order was bad in law due to a violation of the principles of natural justice, specifically a lack of sufficient opportunity to present their case, and that the order was passed ex parte without adequate reasoning. The Revenue stated it had no objection if the matter was remanded for fresh decision on merits, with no coercive steps during pendency.

Held

The Court held that the impugned orders were bad in law 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 represent their case; and (b) the ex parte nature of the orders, which failed to provide sufficient reasoning for determining the amount due. The Court found that all issues of fact and law ought to have been dealt with, even in ex parte proceedings. Consequently, the Court quashed and set aside the impugned orders dated December 18, 2021, January 17, 2021, and February 25, 2022. The Court directed the de-freezing of the petitioner's bank accounts, ordered the petitioner to deposit an additional ten percent of the demand within four weeks (without prejudice to their rights), and for the Assessing Authority to decide the case afresh on merits after complying with the principles of natural justice and affording adequate opportunity to all parties. The Assessing Authority was directed to pass a speaking order within two months of the petitioner's appearance. 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 appellate order dated December 18, 2021, passed by the Additional Commissioner of State Tax (Appeal), is liable to be quashed and set aside on the ground of violation of principles of natural justice, specifically the lack of adequate opportunity of hearing afforded to the petitioner? 2. Whether the order dated January 17, 2021, passed by the Joint Commissioner of State Tax, is liable to be quashed and set aside for being passed ex parte without sufficient reasoning? Petitioner's Contentions: The petitioner argued that the impugned orders were bad in law due to violations of the principles of natural justice, as they were not afforded sufficient time or a fair opportunity to present their case. They also contended that the ex parte orders lacked sufficient reasoning to determine the amount due. The petitioner relied on the general principles of natural justice. Revenue's Contentions: The Revenue stated that it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, with the condition that no coercive steps would be taken against the petitioner during the pendency of the case.