Amarnath Ray vs. The State Of Bihar

Facts

The petitioner, Amarnath Ray, challenged an order dated April 8, 2021, passed by the Additional Commissioner of State Taxes (Appeals), Purnea Division, which rejected his appeal. The appeal was against an order dated December 16, 2020, passed by the Deputy Commissioner of State Taxes, Katihar Circle, under Section 62 of the Bihar Goods and Service Tax Act, 2017, for the tax period June 2020 to October 2020. The petitioner contended that the original order was passed ex parte without sufficient opportunity for hearing and lacked proper reasoning. The Revenue stated it had no objection to the matter being remanded for fresh decision on merits, with no coercive steps during pendency. The High Court noted that the original order was passed in violation of principles of natural justice.

Held

The Court held that it was not precluded from interfering with the matter, despite the availability of statutory remedies, because the impugned order was ex facie bad in law. This was based on two primary reasons: (a) violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient time afforded to the petitioner to present his case, and (b) the ex parte order did not provide sufficient reasons for determining the amount due. The Court found that an ex parte order passed in violation of natural justice entails civil consequences. Consequently, the Court quashed and set aside the order dated April 8, 2021, of the Additional Commissioner (Appeals) and the order dated December 16, 2020, of the Deputy Commissioner. The Court directed the petitioner to deposit 10% of the total demand within four weeks, in addition to any amount already deposited as a prerequisite for appeal hearing. The bank account(s) 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 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. Liberty was reserved for the petitioner to challenge the vires of Section 16(4) of the G.S.T. Act and Rule 61(5) of the G.S.T. Rules in separate proceedings.

Key Issues

1. Whether the order passed by the Additional Commissioner of State Taxes (Appeals) rejecting the petitioner's appeal is sustainable in law, considering the alleged violation of principles of natural justice and lack of sufficient reasons in the original assessment order? 2. Whether the High Court should interfere in the matter notwithstanding the statutory remedy of appeal, given the ex facie illegality of the impugned orders? The petitioner argued that the original order under Section 62 of the Bihar Goods and Service Tax Act, 2017, was passed ex parte, violating the principles of natural justice as he was not afforded a fair opportunity of hearing and sufficient time to represent his case. He further contended that the order lacked sufficient reasoning for determining the amount due. The Revenue stated it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits and agreed that no coercive steps would be taken against the petitioner during the pendency of the case.