Mateshwari Construction vs. The State Of Bihar

Facts

The petitioner, Mateshwari Construction, challenged an order dated October 30, 2021, passed by the Joint Commissioner of State Tax, Aurangabad. This order, along with a consequential demand notice in Form GST DRC-07, raised a demand of ₹12,94,66,670/- against the petitioner for the tax period April 2020 to March 2021. The petitioner contended that the order was passed ex parte and in violation of the principles of natural justice, as they were not afforded sufficient time to present their case. The Revenue stated it had no objection if the matter was remanded for fresh decision on merits, with no coercive steps taken against the petitioner during pendency.

Held

The Court held that the impugned order dated 30.10.2021 and the consequential demand notice dated 30.10.2021 were bad in law 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 was passed ex parte and did not assign sufficient reasons for determining the amount due. The Court found that an ex parte order passed in violation of natural justice entails civil consequences. Consequently, the Court quashed and set aside the impugned order and demand notice. The Court directed the petitioner to deposit ten percent of the total amount (if not already done) and an additional ₹10,00,000/- within four weeks, without prejudice to their rights. The bank accounts of the petitioner were ordered to be de-frozen. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, 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 impugned order dated 30.10.2021 and the consequential demand notice dated 30.10.2021, passed by the Joint Commissioner of State Tax, Aurangabad, are liable to be quashed and set aside on the ground of violation of principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex parte nature of the order, as argued by the petitioner? 2. Whether the order, being ex parte and lacking sufficient reasons for determining the amount due, entails civil consequences and warrants interference by the High Court despite the availability of statutory remedies, as argued by the petitioner? Petitioner's Contentions: The petitioner argued that the order was bad in law due to a violation of the principles of natural justice, specifically that they were not afforded sufficient time to represent their case. They also contended that the order was passed ex parte and did not provide sufficient reasons for the determination of the amount due, thereby entailing civil consequences. Revenue's Contentions: The Revenue stated 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.