Facts of the Case

The petitioner, Pamm Advertising and Marketing, challenged the assessment order dated 05.03.2020 passed by the Assistant Commissioner of State Taxes under Section 74 of the BGST Act, 2017, whereby tax, interest, and penalty amounting to ₹12,93,772 were imposed for the tax period April 2019 to October 2019.

Consequently, a summary order in Form GST DRC-07 was also issued.

The petitioner further challenged the appellate order dated 10.02.2021, whereby the Additional Commissioner (Appeal) dismissed the appeal without considering the submissions and grounds raised by the petitioner. It was contended that both the assessment and appellate orders were passed in violation of the principles of natural justice, without granting an adequate opportunity of hearing and without recording proper reasons.

 

Issues Involved

  1. Whether the assessment order passed under Section 74 of the BGST Act without granting adequate opportunity of hearing is legally sustainable.
  2. Whether an appellate authority can dismiss an appeal without considering the submissions and contentions of the appellant.
  3. Whether an ex parte assessment order lacking proper reasoning violates the principles of natural justice.
  4. Whether the High Court can interfere under Article 226 despite the existence of statutory remedies where the impugned order suffers from violation of natural justice.

 

Petitioner's Arguments

The petitioner submitted that:

  • The assessment order under Section 74 was passed without providing a fair and reasonable opportunity of hearing.
  • The appellate authority dismissed the appeal mechanically without dealing with the submissions raised in appeal.
  • The impugned orders were non-speaking and unsupported by proper reasoning.
  • The authorities failed to consider the facts and legal issues involved.
  • The orders violated settled principles laid down by the Supreme Court regarding reasoned orders and observance of natural justice.
  • Accordingly, both the assessment order and GST DRC-07 deserved to be quashed.

 

Respondents' Arguments

The Revenue submitted before the High Court that:

  • It had no objection if the matter was remanded to the Assessing Authority for fresh adjudication.
  • The limitation period should not obstruct fresh adjudication.
  • The matter could be decided afresh strictly on merits.
  • During the pendency of fresh proceedings, no coercive action would be taken against the petitioner.

 

Court Order / Findings

The Patna High Court held that judicial interference was warranted despite the availability of statutory remedies because the impugned orders were ex facie illegal and violated the principles of natural justice.

The Court observed that:

  • Adequate opportunity of hearing was not granted to the petitioner.
  • The assessment order was substantially ex parte in nature.
  • The authorities failed to assign proper reasons explaining the determination of tax liability.
  • Even in ex parte proceedings, the adjudicating authority must examine all factual and legal issues.
  • Orders having civil consequences must be reasoned and passed after following fair procedure.

Accordingly, the High Court:

  • Quashed the appellate order dated 10.02.2021.
  • Quashed the assessment order dated 05.03.2020 passed under Section 74.
  • Quashed the summary order issued in Form GST DRC-07.
  • Directed the petitioner to deposit an additional 10% of the disputed demand (without prejudice to rights).
  • Directed immediate de-freezing/de-attachment of the petitioner's bank account, if attached.
  • Directed the Assessing Authority to conduct fresh adjudication after granting adequate opportunity of hearing.
  • Directed that no coercive action shall be taken during the pendency of fresh proceedings.
  • Directed the Assessing Authority to pass a fresh speaking order after considering all materials.
  • Clarified that the Court had not expressed any opinion on the merits of the dispute.

 

Important Clarification

This judgment reiterates that:

  • An assessment under Section 74 of the BGST/CGST Act cannot survive where proper opportunity of hearing has not been granted.
  • Ex parte GST assessment orders must contain adequate reasoning.
  • Appellate authorities are required to independently consider all submissions made by appellants.
  • A speaking order is mandatory where civil consequences follow.
  • The High Court may exercise writ jurisdiction despite alternate remedies where there is a clear violation of natural justice.
  • During remand proceedings, coercive recovery may be restrained to ensure fair adjudication.

Sections Involved

  • Section 74 of the Bihar Goods and Services Tax Act, 2017 (BGST Act)
  • Section 74 of the CGST Act, 2017 (pari materia)
  • Principles of Natural Justice
  • GST DRC-07
  • Appellate Proceedings under the BGST Act


Link to download the order -

https://www.mytaxexpert.co.in/uploads/1782894827_163compressed.pdf

 

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