M/S Ajay Kumar Singh, A Proprietorship Firm 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 appellate order 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 order in Form GST DRC-07, was also challenged. The petitioner contended that the appellate order was passed in violation of principles of natural justice, as insufficient time was provided for hearing, and the order was ex parte without sufficient reasoning. The Revenue stated it had no objection if the matter was remanded for fresh adjudication on merits, with no coercive steps taken against the petitioner during pendency.

Held

The Court held that the impugned orders were bad in law, primarily 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 to represent their case, and (b) the order being passed ex parte without assigning sufficient reasons for determining the amount 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. 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 petitioner to deposit ten percent of the total amount (if not already deposited) as a prerequisite for hearing the appeal, and additionally deposit another ten percent of the demand raised before the Assessing Officer within four weeks. These deposits were to be without prejudice to the rights and contentions of the parties. The Court also directed de-freezing of the petitioner's bank accounts. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity for hearing and placing of documents, and passing a speaking order 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 merits, and all issues were left open.

Key Issues

1. Whether the appellate order dated December 18, 2021, passed by the Additional Commissioner of State Tax (Appeal) is bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the passing of an ex parte order without sufficient reasons? (Relates to principles of natural justice and procedural fairness). Petitioner's Arguments: The petitioner argued that the order was bad in law because it violated the principles of natural justice. Specifically, they claimed that they were not afforded sufficient time to present their case, leading to an ex parte order. Furthermore, the petitioner contended that the order lacked adequate reasoning to justify the determined amount due, and the authorities failed to adjudicate the matter based on the attending facts and circumstances. All issues, both of fact and law, should have been addressed, even in an ex parte proceeding. 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. The Revenue also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.