Shankar Singh vs. The State Of Bihar, Through The Commissioner - Cum - Principal Secretary

Facts

The petitioner, Shankar Singh, proprietor of M/s Shivam Construction, challenged an order dated January 23, 2021, passed by the Additional Commissioner of State Tax (Appeal), Patna West Division. This order rejected his appeal against a demand order dated March 13, 2020, issued by the Assistant Commissioner of State Tax, Patna Central, Patna West. The appeal was rejected solely on the grounds of being barred by limitation. Both the demand 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 had no objection to the matter being remanded for a fresh decision on merits.

Held

The Court quashed and set aside both the impugned appellate order dated January 23, 2021, and the demand order dated March 13, 2020. The Court found that the ex parte nature of the orders and the violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing and insufficient reasoning in the orders, rendered them bad in law. The Court accepted the petitioner's statement that 10% of the total amount, a prerequisite for hearing the appeal, had already been deposited. The petitioner was directed to deposit an additional 10% of the demand within four weeks, without prejudice to the rights of the parties. 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 for hearing and submission of documents, and to pass 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 the merits of the case, leaving all issues open.

Key Issues

1. Whether the appeal filed by the petitioner before the Additional Commissioner of State Tax (Appeal) was barred by limitation, considering the COVID-19 restrictions, and if the rejection of the appeal on this ground, without considering the merits, violated the principles of natural justice? Petitioner's arguments: The petitioner argued that the delay in filing the appeal was attributable to the COVID-19 pandemic and its associated restrictions, which prevented timely filing. The rejection of the appeal solely on limitation grounds, without affording a proper hearing and without considering the merits, constituted a violation of the principles of natural justice, especially since the order was ex parte and lacked sufficient reasoning. The petitioner also highlighted that the ex parte order did not adequately explain how the amount due was determined. Revenue's arguments: The Revenue stated that it had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits.