M/S Deora Electric Works vs. The State Of Bihar

Facts

The petitioner, M/s Deora Electric Works, filed a writ petition challenging an order dated 09.03.2020 passed by the Additional Commissioner, Commercial Taxes (Appeal), Patna West Division, Patna. This appellate order dismissed the petitioner's appeal against an order dated 21.12.2018 passed by the Joint Commissioner, Danapur Circle. The Joint Commissioner had imposed a tax demand of Rs. 18,69,286.00, comprising tax, interest, and penalty, for the period 01.07.2017 to 31.03.2018. The petitioner contended that the appellate order was passed ex-parte without providing an opportunity of hearing, despite the hard copy of the appeal being filed on 07.03.2020. The petitioner also argued that the original demand was raised without considering their bonafide actions regarding WCT deductions and input tax credit carried forward in TRAN-1.

Held

The High Court quashed and set aside the impugned order dated 09.03.2020 passed by the Additional Commissioner (Appeal), the order dated 21.12.2018 passed by the Joint Commissioner, and the demand notice dated 09.02.2020. The Court found that the appellate order was bad in law due to the violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and the ex-parte nature of the order, which did not provide sufficient reasons for determining the amount due. The Court directed the petitioner to deposit ten percent of the total amount demanded, if not already deposited, and an additional ten percent of the demand before the Assessing Officer within four weeks. These deposits were to be without prejudice to the parties' rights and subject to the final order. The Court also directed the de-freezing of the petitioner's bank accounts. The matter was remanded to the Assessing Authority 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 it had not expressed any opinion on the merits of the case, leaving all issues open.

Key Issues

1. Whether the order dated 09.03.2020 passed by the Additional Commissioner (Appeal) is liable to be quashed for violating the principles of natural justice, specifically for being passed ex-parte without affording an adequate opportunity of hearing to the petitioner, contrary to Section 73(9) and Section 79(1)(c) of the BGST Act, 2017? Petitioner's Arguments: The petitioner argued that the appellate authority passed an ex-parte order on 09.03.2020 without issuing any notice and without providing an opportunity of hearing, despite the appeal being filed on 07.03.2020. They contended that this violated the principles of natural justice. Furthermore, the petitioner argued that the original demand raised by the Joint Commissioner did not consider their bonafide actions concerning Work Contract Tax (WCT) deductions and the carrying forward of input tax credit in TRAN-1. They also sought a refund of Rs. 13,95,000/- deducted from invoices and the de-freezing of their bank accounts. 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. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.