Cityneon Holding LTD. And Cityneon Creations Pte LTD. And Cityneon Dag 1 PVT LTD. vs. The State Of Bihr Through The Principal Secretary Cum Commissioner

Facts

The petitioner, Cityneon Holding Ltd. and its associated entities, filed a writ petition challenging an order dated February 11, 2021, passed by the Additional Commissioner of State Taxes (Appeal), Patna. This order had rejected the petitioner's appeal against an order dated August 7, 2019, passed by the Deputy Commissioner of State Taxes, Patna. The appeal was rejected solely on the grounds of being barred by 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 due to COVID-19 restrictions. The revenue stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits.

Held

The Court quashed and set aside the impugned order dated February 11, 2021, passed by the Additional Commissioner of State Taxes (Appeal), and the order dated August 7, 2019, passed by the Deputy Commissioner of State Taxes. The Court found that the ex parte orders violated the principles of natural justice, as the petitioner was not afforded a fair opportunity of hearing and the orders lacked sufficient reasoning for the determined amount due. The Court noted that such orders, entailing civil consequences, could be interfered with even notwithstanding the statutory remedy. The Court directed the petitioner to deposit ten percent of the total amount demanded by the Assessing Officer within four weeks, in addition to any amount already deposited as a prerequisite for appeal hearing. 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 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 the pendency of the proceedings. The Court explicitly stated that it had not expressed any opinion on merits and all issues were left open.

Key Issues

1. Whether the appeal filed by the petitioner before the Additional Commissioner of State Taxes (Appeal) was barred by limitation, considering the COVID-19 pandemic restrictions, and if so, whether the delay was sufficiently explained? 2. Whether the ex parte orders passed by the Deputy Commissioner of State Taxes and the Additional Commissioner of State Taxes violated the principles of natural justice by not affording a fair opportunity of hearing and by lacking sufficient reasoning for the demand? Petitioner's Arguments: The petitioner argued that the delay in filing the appeal was attributable to the COVID-19 restrictions, which prevented them from presenting their case effectively. They also contended that both the original order and the appellate order were passed ex parte, violating the principles of natural justice, as they were not afforded a sufficient opportunity to represent their case and the orders lacked adequate reasoning for the determined tax liability. Revenue's Arguments: 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.