Om Shanti Construction vs. State Of Bihar

Facts

The petitioner, Om Shanti Construction, filed a writ petition challenging an order dated March 4, 2020, a summary of order in Form GST DRC-07, and a demand order for the period 2019-20, along with a show cause notice. These orders were passed ex parte by the Assistant Commissioner of State Tax, East Circle, Muzaffarpur. The petitioner contended that the orders were passed in violation of principles of natural justice, specifically alleging insufficient time for representation and a lack of sufficient reasons in the ex parte orders. The Revenue stated it 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 Court found that the petitioner was not afforded a fair opportunity of hearing, as insufficient time was given to represent their case. Furthermore, the ex parte orders did not provide sufficient reasons for determining the amount due and payable by the assessee. The Court noted that ex parte orders passed in violation of natural justice entail civil consequences. Consequently, the Court quashed and set aside the impugned order dated March 4, 2020, the summary of order in Form GST DRC-07, the demand order, and the show cause notice. The Court directed the petitioner to deposit ten percent of the total amount (if not already deposited) and an additional ten percent of the demand raised within four weeks. The bank accounts of the petitioner were to be de-frozen. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording an opportunity of hearing 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 the merits of the case, and all issues were left open.

Key Issues

1. Whether the impugned orders dated March 4, 2020, and the related show cause notice, passed ex parte by the Assistant Commissioner of State Tax, East Circle, Muzaffarpur, are liable to be quashed on the grounds of violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient reasons provided in the ex parte orders, thereby entailing civil consequences for the petitioner? Petitioner's Arguments: The petitioner argued that the orders were passed ex parte without affording sufficient time to represent their case and that the orders lacked decipherable reasons for determining the amount due. This violation of natural justice, they contended, made the orders bad in law. Revenue's Arguments: The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, and that no coercive steps would be taken against the petitioner during the pendency of the case.