GST Demand Order under Section 74 set aside being violative of principles of natural justice

Patna High Court: Order imposing liability of tax, interest and penalty has been imposed in a proceeding under Section 74 of the Bihar Goods and Services Tax Act, 2017 set aside being violative of principles of natural justice.

M/s Manoj Kumar vs State of Bihar & Ors.; Civil Writ Jurisdiction case no. 17524 of 2021; High Court of Judicature at Patna; 06.10.2021

The present petition was filed seeking the following:

• quashing of the communication in form GST APL-04 dated 09.04.2021 issued by the Additional Commissioner of State Taxes (Appeal), Purnea Division, Purnea whereby the appeal preferred by the petitioner against the order dated 09.02.2021 passed by the Assistant Commissioner of State Taxes, Saharsa Circle, Saharsa. under section 74 of the Bihar Goods and Services Tax Act, 2017 (Hereinafter after referred to as Bihar Act) has been rejected and a summary revised demand has been forwarded to the petitioner;
• quashing of the order dated 09.02.2021 passed and issued by the Assistant Commissioner of State Taxes, Saharsa Circle, Saharsa whereby liability of tax, interest and penalty has been imposed in a proceeding under Section 74 of the Bihar Act 2017;
• declaration that the impugned order dated 09.04.2021 passed by the respondent number 2 as first appellate authority is highly cryptic, nonspeaking and in teeth of section 107 of the Bihar Act, 2017;

Observations and findings:

• The Bench considered it necessary to interfere in the operation of the order as it was considered bad in law for two reasons:
  • Violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case;
  • Order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee.
• It was held that the impugned 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:
  • The impugned order was quashed and set aside
  • The statement of the petitioner was accepted which stated that ten per cent of the total amount, being condition prerequisite for hearing of the appeal, already stands deposited. If that were so, well and good;
  • Further, the petitioner undertook to additionally deposit ten per cent of the amount of the demand raised before the Assessing Officer.
  • The bench directed 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.
  • The Assessing Authority shall decide the case on merits after complying with the principles of natural justice;
  • Opportunity of hearing shall be afforded to the parties to place on record all essential documents and materials,
  • During pendency of the case, no coercive steps shall be taken against the petitioner.
  • The Assessing Authority was directed to pass a speaking order assigning reasons.