M/S Vinayak Sales vs. The State Of Bihar

Facts

The petitioner, M/s Vinayak Sales, filed a writ petition challenging an order dated 01.03.2021 passed by the Additional Joint Commissioner of State Tax (Appeal), Patna, which rejected their appeal against an order dated 14.03.2020 by the Assistant Commissioner of State Tax, Patna. The appellate order rejected the petitioner's appeal solely on the grounds of limitation. Both the original order and the appellate order were ex parte. The petitioner contended that the delay in filing the appeal was sufficiently explained by COVID-19 restrictions. The Revenue stated it had no objection to the matter being remanded for a fresh decision on merits, with no coercive steps taken against the petitioner during the pendency.

Held

The Court quashed and set aside both the appellate order dated 01.03.2021 and the original order dated 14.03.2020. The Court found that the ex parte nature of the orders, coupled with the violation of the principles of natural justice (lack of sufficient opportunity of hearing and insufficient reasoning), rendered them bad in law. The Court accepted the petitioner's submission that the delay was sufficiently explained by COVID-19 restrictions. The Court directed the petitioner to deposit 10% of the demand raised by the Assessing Officer within four weeks, in addition to any amount already deposited as a prerequisite for hearing the appeal. 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 principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order within two months of the petitioner's appearance. No opinion was expressed on the merits of the case, and all issues were left open.

Key Issues

1. Whether the appellate authority erred in rejecting the petitioner's appeal on grounds of limitation, considering the prevailing COVID-19 restrictions, thereby violating principles of natural justice? 2. Whether the ex parte orders passed by the Assistant Commissioner and the Appellate Authority are bad in law due to lack of sufficient reasoning and violation of the principles of natural justice? Petitioner's arguments: The petitioner argued that the delay in filing the appeal was due to COVID-19 restrictions and that the ex parte orders were passed without affording a fair opportunity of hearing and lacked sufficient reasoning, thus violating principles of natural justice and entailing civil consequences. Revenue's arguments: The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a decision on merits, with no coercive steps to be taken against the petitioner during the pendency of the case.