M/S. Sri Gopikrishna Infrastructure Private Limited vs. The State Of Bihar Through The Commissioner Cum Secretary

Facts

The petitioner, M/s. Sri Gopikrishna Infrastructure Private Limited, challenged an appellate order dated February 28, 2020, passed by the Additional Commissioner State Tax (Appeals) and an adjudication order dated September 17, 2019, passed by the Deputy Commissioner of State Tax. Both impugned orders were ex-parte. The petitioner's appeal before the Appellate Authority was rejected solely on the grounds of limitation. The petitioner sought to quash these orders, set aside recovery proceedings for transitional credit under Section 73 of the BGST Act and Rule 121 of BGST Rules, and declare Rule 121 of BGST Rules, 2017, ultra vires. The Court initially passed an order on July 9, 2021, which was inadvertently typed with a direction to appear before the Assessing Authority. This order was subsequently recalled and modified.

Held

The Court quashed and set aside the appellate order dated February 28, 2020, passed by the Additional Commissioner State Tax (Appeals). The Court accepted the petitioner's contention that the delay in filing the appeal was sufficiently explained by the COVID-19 restrictions. The Court directed the Appellate Authority to condone the delay and decide the appeal on merits after complying with the principles of natural justice. The Court also directed that ten percent of the total amount, as a prerequisite for hearing the appeal, should be deposited if not already done, without prejudice to the parties' rights. The Court ordered the de-freezing/de-attaching of the petitioner's bank accounts. 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 Rule 121 of the BGST Rules, 2017, by way of separate proceedings. The Appellate Authority was directed to pass a speaking order expeditiously, preferably within two months from the petitioner's appearance, after affording adequate opportunity to all concerned. The Court also directed that proceedings during the pandemic should be conducted through digital mode if possible.

Key Issues

1. Whether the delay in filing the appeal before the Appellate Authority, which led to its rejection, was sufficiently explained, considering the COVID-19 restrictions, and if the appeal should be decided on merits? (Question of law and fact, concerning principles of natural justice and procedural fairness). 2. Whether the proceedings for recovery of transitional credit initiated under Section 73 of the BGST Act and Rule 121 of BGST Rules are valid? (Question of law, concerning the validity of recovery proceedings and the relevant statutory provisions). 3. Whether Rule 121 of the BGST Rules, 2017, is ultra vires the BGST Act, 2017? (Question of law, concerning the legislative competence and validity of subordinate legislation). Petitioner's arguments: The petitioner argued that the delay in filing the appeal was due to COVID-19 restrictions and that the appellate order and adjudication order were passed ex-parte, violating principles of natural justice. They sought a remand for fresh adjudication with an opportunity to make submissions. They also challenged the recovery proceedings and the validity of Rule 121. Revenue's arguments: The Revenue's counsel had no objection if the matter was remanded to the Appellate Authority for deciding the appeal afresh, without taking the ground of delay into account, and to decide the appeal on merits. They also agreed that no coercive steps should be taken against the petitioner during the pendency of the appeal.