Om Shanti Construction vs. The State Of Bihar

Facts

The petitioner, Om Shanti Construction, filed a writ petition before the Patna High Court challenging a show cause notice dated December 9, 2020, and subsequent orders dated January 11, 2021, and February 11, 2021, issued by the Assistant Commissioner of State Tax, East Circle, Muzaffarpur. These orders pertained to the tax period 2019-20 and were passed ex parte. The petitioner sought to quash these notices and orders. The Revenue, through its counsel, stated it had no objection if the matter was remanded to the Assessing Authority for 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 petitioner was not afforded a fair opportunity of hearing and was not given sufficient time to represent their case. Furthermore, the ex parte orders lacked decipherable reasons for determining the amount due and payable by the assessee. The Court found that such orders, entailing civil consequences, could be interfered with by the High Court, notwithstanding the availability of statutory remedies. Consequently, the Court quashed and set aside the show cause notice and all subsequent orders. The Court also directed the petitioner to deposit ten percent of the total amount demanded (if not already deposited) and an additional ten percent of the demand 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 no opinion was expressed on the merits of the case and all issues were left open.

Key Issues

1. Whether the impugned orders, passed ex parte, are liable to be quashed for violation of the principles of natural justice, specifically the right to a fair opportunity of hearing and for lack of sufficient reasons in determining the amount due? (Question of law and mixed fact and law) Petitioner's Contention: The petitioner argued that the orders were passed ex parte, violating the principles of natural justice, as they were not afforded a fair opportunity of hearing and sufficient time to present their case. They also contended that the ex parte orders lacked sufficient reasoning to justify the determined tax liability. Revenue's Contention: The Revenue did not contest the petitioner's claim for a remand and agreed to the matter being decided afresh on merits by the Assessing Authority, without coercive steps against the petitioner.