Pinax Steel Industries PVT. LTD. vs. The State Of Bihar

Held

The High Court held that the principles of natural justice were violated in passing the impugned order dated 30.11.2019 by the Joint Commissioner of State Taxes, Danapur Circle, Patna. The Court agreed with the petitioner's counsel that the order, which fastened a financial liability on the petitioner and entailed civil consequences, was passed without affording an adequate opportunity of hearing or assigning any reason. Consequently, the Court quashed and set aside the impugned order and the connected demand notice. The Court also directed that the petitioner shall deposit a sum of Rs. 10 lacs on or before 6th February, 2021, and appear before the authority on the same date to place additional material if required. The authority was directed to decide the matter afresh on merits, in compliance with the principles of natural justice, on or before 3rd April, 2021. The Court explicitly stated that it had not expressed any opinion on the merits of the case and had quashed the order solely on the ground of violation of principles of natural justice. Any excess deposit by the petitioner would be refunded expeditiously.

Facts

The petitioner, Pinax Steel Industries Pvt. Ltd., filed a writ petition before the Patna High Court challenging an order dated 30.11.2019 passed by the Joint Commissioner of State Taxes, Danapur Circle, Patna. This order, along with a connected demand notice in form GST DRC-07, was passed in exercise of powers under Section 73(9) and Section 50 of the Bihar Goods and Service Tax Act, 2017. The petitioner sought quashing of the order and demand notice, and also prayed for an opportunity to file a comprehensive reply and be heard in the proceedings initiated under Section 73 of the Act. The petitioner contended that the Assessing Authority did not respond to their petition dated 19.10.2019 seeking further time, and passed the impugned order without fixing a date for hearing, thereby violating principles of natural justice.

Key Issues

1. Whether the impugned order dated 30.11.2019 passed by the Joint Commissioner of State Taxes, Danapur Circle, Patna, and the connected demand notice, are liable to be quashed on the ground of violation of principles of natural justice, as argued by the petitioner. 2. Whether the petitioner is entitled to an opportunity of filing a comprehensive reply and being heard in the proceedings initiated under Section 73 of the Bihar Goods and Service Tax Act, 2017, as contended by the petitioner. Petitioner's Arguments: The petitioner argued that the order was passed without affording an adequate opportunity of hearing and without assigning any reason, thus violating the principles of natural justice. They also contended that their petition seeking further time was not responded to, and the order was passed without fixing a date for hearing, which denied them their right to adequate opportunity of hearing. The petitioner was willing to deposit a sum of Rs. 10 lacs without prejudice to their rights and contentions. Revenue's Arguments: The judgment records no specific arguments from the respondent revenue.