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Durain Industries Li... v. State Of Bihar, Thro...
Factual and Procedural Background
The petitioner sought to quash an ex-parte order dated 25.02.2022 and a summary order dated 30.01.2020 passed by the Joint Commissioner of State Taxes, Kadam Kuan Circle, Patna, concerning a demand of tax, interest, and penalty under the Central Goods and Services Tax Act, 2017 and the Bihar Goods and Services Tax Act, 2017 for the period 2017-2018. The petition challenged the validity of these orders primarily on grounds of violation of natural justice and absence of reasons in the ex-parte order. The respondent, through its counsel, agreed to remand the matter to the Assessing Authority for a fresh decision on merits and undertook not to take coercive action during the pendency of the petition.
Legal Issues Presented
- Whether the ex-parte order dated 25.02.2022 and the summary order dated 30.01.2020 can be quashed on the ground of violation of principles of natural justice.
- Whether the court has jurisdiction to interfere with the statutory order notwithstanding the availability of statutory remedies, when the order is prima facie bad in law.
- Whether an order passed ex-parte without sufficient time for representation and without assigning decipherable reasons is legally sustainable.
Arguments of the Parties
Petitioner's Arguments
- The impugned ex-parte order and summary order should be quashed as they violate the settled principle that no decision passed after due examination of materials can be re-opened without material foreign to the original record.
- The petitioner sought to restrain the respondent from coercive recovery actions during the pendency of the writ petition.
- The petitioner contended that the orders were passed without affording a fair opportunity of hearing, violating principles of natural justice.
Respondent's Arguments
- The learned counsel for the Revenue expressed no objection to remanding the matter to the Assessing Authority for a fresh decision on merits.
- The respondent undertook not to initiate coercive recovery steps during the pendency of the writ petition.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court observed that despite the statutory remedies available, it is not precluded from interfering where an order is manifestly bad in law. The Court identified two principal reasons for interference: (a) the violation of natural justice as the petitioner was not given sufficient time to represent its case; and (b) the ex-parte order failed to assign any decipherable reasons on how the tax demand was determined. The Court noted that such an order, passed in violation of natural justice and without adequate reasoning, entails civil consequences and is therefore liable to be quashed. The Court emphasized that the authorities failed to adjudicate the matter on the attending facts and circumstances and that all issues of fact and law ought to have been addressed even in an ex-parte proceeding. The Court mandated that the Assessing Authority must pass a fresh, reasoned order after affording adequate opportunity to the petitioner, ensuring compliance with principles of natural justice.
Holding and Implications
The Court quashed and set aside the impugned ex-parte order dated 25.02.2022 and the summary order dated 30.01.2020.
The petitioner was directed to deposit 20% of the demand amount within eight weeks, subject to adjustment if such deposit had already been made or was found to be in excess. The respondent was directed to immediately de-freeze any bank accounts attached in connection with the proceedings. The Assessing Authority was instructed to decide the case afresh on merits after affording a fair opportunity of hearing and passing a speaking order within two months of the petitioner's appearance. No coercive action was to be taken during the pendency of the fresh assessment. Liberty was reserved to the petitioner to challenge the fresh order before the Court, and to both parties to avail other legal remedies as available. The Court did not express any opinion on the merits and left all factual and legal issues open. This decision directly affects the parties by mandating a fresh adjudication but does not establish any new legal precedent.
Sanjay Karol, C.J.:— Petitioner has prayed for the following relief(s):—
“a. For issuance of writ in the nature of certiorari for quashing of the ex-parte order dated 25.02.2022 passed and the summary of order in form GST DRC-07 dated 30.01.2020 passed by the respondent no. 2 under the Central Goods and Service Tax Act, 2017 (hereinafter referred to as the Central Act, 2017 for short) and Bihar Goods and Services Tax Act, 2017 hereinafter referred to as the Bihar Act, 2017 for short) raising demand of Tax, interest and penalty.
b. For issuance of writ/order/direction restraining the Respondent No. 2 from making any coercive recovery of the tax, interest and penalty demanded in terms of the impugned ex-parte order of assessment during the pendency of the present writ application.
c. For holding and a declaration that the impugned order is in teeth of the settled principle of law that no decision passed after due examination of materials on record can be re-opened in absence of any material foreign to the original records,
d. For grant of any other relief/s to which the petitioner be found entitled in the facts and circumstances of this case.”
2. This petition has been filed for quashing of order dated 25.02.2022 passed by the respondent no. 2 namely The Joint Commissioner of State Taxes, Kadam Kuan Circle, Patna in GST/DRC-13 and summary of order dated 30.01.2020 in Form GST/DRC-07 for the period 2017-2018. The order is ex parte in nature.
3. Learned counsel for the Revenue, states that he has no objection if the matter is remanded to the Assessing Authority for deciding the case afresh. Also, the case shall be decided on merits. Also, during pendency of the case, no coercive steps shall be taken against the petitioner.
4. Statement accepted and taken on record.
5. However, having heard learned counsel for the parties as also perused the record made available, we are of the considered view that this Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any reason sufficient even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. As such, on this short ground alone, we dispose of the present writ petition in the following mutually agreeable terms:
(a) We quash and set aside the impugned order dated 25.02.2022 passed by the respondent no. 2 namely the Joint Commissioner of State Taxes, Kadam Kuan Circle, Patna in GST/DRC-13 and summary of order dated 30.01.2020 in Form GST/DRC-07 for the period 2017-18;
(b) The petitioner undertakes to deposit 20% of the amount of the demand raised before the Assessing Authority. This shall be done within eight weeks;
(c) This deposit shall be without prejudice to the respective rights and contention of the parties and subject to the order passed by the Assessing Officer. However, if it is ultimately found that the petitioner had already deposited up to the extent of twenty percent, the same shall be set off against the amount to be deposited. Also, if the deposit is found to be in excess, the same shall be refunded within two months from the date of passing of the order;
(d) We also direct for de-freezing/de-attaching of the bank account(s) of the writ-petitioner, if attached in reference to the proceedings, subject matter of present petition. This shall be done immediately;
(e) Petitioner undertakes to appear before the Assessing Authority on 20.04.2022 at 10 : 30 A.M.;
(f) The Assessing Authority shall decide the case on merits after complying with the principles of natural justice;
(g) We also find the authorities not to have adjudicated the matter on the attending facts and circumstances. All issues of fact and law ought to have been dealt with, even if the proceedings were to be ex parte in nature;
(h) Opportunity of hearing shall be afforded to the parties to place on record all essential documents and materials, if so required and desired;
(i) During pendency of the assessment, no coercive steps shall be taken against the petitioner.
(j) The Assessing Authority shall pass a fresh order only after affording adequate opportunity to all concerned, including the writ petitioner;
(k) Petitioner through learned counsel undertakes to fully cooperate in such proceedings and not take unnecessary adjournment;
(l) The Assessing Authority shall decide the case on merits expeditiously, preferably within a period of two months from the date of appearance of the petitioner;
(m) The Assessing Authority shall pass a speaking order assigning reasons, copy whereof shall be supplied to the parties;
(n) Liberty reserved to the petitioner to challenge the order before this Court, if required and desired;
(o) Equally, liberty reserved to the parties to take recourse to such other remedies as are otherwise available in accordance with law;
(p) We are hopeful that as and when petitioner takes recourse to such remedies, before the appropriate forum, the same shall be dealt with, in accordance with law, with reasonable dispatch;
(q) We have not expressed any opinion on merits and all issues are left open;
6. The instant petition sands disposed of in the aforesaid terms.
7. Interlocutory Application(s), if any, also stands disposed of.
8. Learned counsel for the respondents undertakes to communicate the order to the appropriate authority through electronic mode.
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