M/S Gopal Enterprises A Proprietorship Firm Having Its Place Of Business At Shiv Mandir Chowk vs. The State Of Bihar

Facts

M/s Gopal Enterprises, a proprietorship firm, filed a writ petition challenging an order dated January 7, 2021, passed by the Assistant Commissioner of State Taxes, Katihar Circle, under Section 74(1) of the Bihar Goods and Services Tax Act, 2017. The petitioner also challenged an order dated February 26, 2021, passed by the Additional Commissioner of State Taxes (Appeals), Purnea Division, which summarily rejected their appeal against the initial order. The petitioner contended that the original order was beyond the scope of the show cause notice and violated principles of natural justice due to inadequate opportunity of hearing. The appellate order was also challenged as non-speaking and failing to consider the grounds of appeal. The revenue stated it had no objection if the matter was remanded to the Assessing Authority for a fresh decision on merits, with no coercive steps taken against the petitioner during pendency.

Held

The Court quashed and set aside both the appellate order dated February 26, 2021, and the original order dated January 7, 2021. The Court found that the original order was passed ex parte in nature, in violation of the principles of natural justice, as the petitioner was not afforded a fair opportunity of hearing and sufficient time to represent their case. Furthermore, the order did not provide sufficient reasons for determining the amount due. The Court also noted that the appellate order was non-speaking and did not address the grounds of appeal. Based on these grounds alone, the Court disposed of the writ petition. The Court directed the petitioner to deposit 10% of the demand within four weeks, in addition to any amount already deposited. Bank accounts were 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 for hearing and document submission, 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 it had not expressed any opinion on the merits of the case, leaving all issues open.

Key Issues

1. Whether the order dated January 7, 2021, passed by the Assistant Commissioner of State Taxes under Section 74(1) of the Bihar Goods and Services Tax Act, 2017, was beyond the scope of the show cause notice dated December 9, 2020, and thus violative of the principles of natural justice? The petitioner argued that they were not afforded adequate opportunity of hearing on the specific issues considered by the authority. 2. Whether the appellate order dated February 26, 2021, passed by the Additional Commissioner of State Taxes (Appeals) was non-speaking and in contravention of Section 107(11) and (12) of the Bihar Goods and Services Tax Act, 2017, by failing to consider the factual materials and grounds of appeal? The petitioner contended that the appellate authority failed to exercise its jurisdiction properly. The revenue stated it had no objection to a remand for fresh decision on merits.