Om Shanti Construction vs. State Of Bihar

Facts

The petitioner, Om Shanti Construction, filed a writ petition before the Patna High Court challenging an order dated 04.03.2020, a summary of order dated 04.03.2020 (Form GST DRC-07), a demand order dated 04.03.2020, and a show cause notice dated 01.02.2020. These were issued by the Assistant Commissioner of State Tax, East Circle, Muzaffarpur, for the period 2018-19. The petitioner contended that these orders were ex parte and passed in violation of principles of natural justice, as they were not afforded a fair opportunity of hearing. The revenue, through its counsel, had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps to be taken against the petitioner during the pendency of the case.

Held

The Court held that the impugned orders were bad in law due to a violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing afforded to the petitioner. The Court also noted that the ex parte orders did not provide sufficient reasoning for the determination of the amount due. Consequently, on these grounds alone, the Court quashed and set aside the impugned show cause notice and the orders dated 04.03.2020. The Court accepted the petitioner's undertaking to deposit ten percent of the total amount demanded (if not already deposited) and an additional ten percent of the demand within four weeks. The Court also directed the 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 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. The Court also directed that proceedings during the pandemic be conducted digitally if possible.

Key Issues

1. Whether the impugned orders, being ex parte and passed without affording a fair opportunity of hearing to the petitioner, are bad in law and liable to be quashed, in violation of the principles of natural justice? 2. Whether the ex parte orders, which do not assign sufficient reasons for determining the amount due and payable by the assessee, are legally sustainable? Petitioner's Contentions: The petitioner argued that the impugned orders were passed ex parte and in violation of the principles of natural justice, as they were not given sufficient time or opportunity to present their case. They contended that the orders lacked sufficient reasoning to justify the demand. Revenue's Contentions: The learned counsel for the revenue stated that they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.