Facts of the Case

The petitioner, M/s NR Motors Barsoi Katihar, challenged the assessment order dated 05.02.2021 passed under Section 73 of the CGST/BGST Act, 2017, the consequential demand notice dated 22.07.2022 issued in Form GST DRC-13, and the appellate order dated 24.09.2022.

The appellate authority dismissed the appeal solely on the ground that the petitioner had not submitted the certified copy of the assessment order. The petitioner approached the Patna High Court seeking quashing of the assessment order, demand notice, and appellate order, along with appropriate consequential reliefs.

 

Issues Involved

  1. Whether the appellate authority was justified in rejecting the appeal for non-submission of the certified copy of the assessment order.
  2. Whether the assessment order passed under Section 73 violated the principles of natural justice.
  3. Whether an ex parte assessment order without proper reasoning and adequate opportunity of hearing could be sustained in law.
  4. Whether the High Court could interfere despite the availability of statutory remedies.

 

Petitioner's Arguments

  • The assessment order was passed without providing sufficient opportunity of hearing.
  • The assessment proceedings were conducted ex parte in violation of the principles of natural justice.
  • The assessment order did not contain adequate reasons explaining how the tax liability had been determined.
  • The appellate authority mechanically rejected the appeal merely for non-submission of the certified copy instead of deciding the matter on merits.
  • The impugned orders deserved to be quashed and the matter required fresh adjudication.

 

Respondent's Arguments

The Revenue submitted that it had no objection if the matter was remanded to the Assessing Authority for fresh adjudication. It further stated that:

  • The case could be decided afresh on merits.
  • Limitation would not come in the way.
  • No coercive action would be taken against the petitioner during the pendency of fresh proceedings.

 

Court Order / Findings

The Patna High Court allowed the writ petition and held that interference under Article 226 was justified despite the availability of an alternative statutory remedy because the impugned proceedings suffered from patent legal infirmities.

The Court observed that:

  • Adequate opportunity of hearing was not granted to the petitioner.
  • The assessment order was passed ex parte in violation of the principles of natural justice.
  • The assessment order failed to assign sufficient reasons for determining the tax liability.
  • The authorities failed to adjudicate all factual and legal issues involved in the matter.

Accordingly, the Court:

  • Quashed the appellate order dated 24.09.2022.
  • Quashed the assessment order dated 05.02.2021.
  • Quashed the demand notice dated 22.07.2022 issued in Form GST DRC-13.
  • Directed the petitioner to cooperate in fresh proceedings.
  • Directed the Assessing Authority to decide the matter afresh after granting adequate opportunity of hearing.
  • Directed that a reasoned and speaking order be passed.
  • Ordered de-freezing/de-attachment of the petitioner's bank account, if attached.
  • Directed that no coercive action be taken during the pendency of fresh proceedings.
  • Reserved liberty to both parties to pursue remedies available under law after the fresh order.

 

Important Clarification

This judgment reiterates that:

  • Rejection of appeals on technical grounds should not override substantive justice where the matter requires adjudication on merits.
  • An assessment order passed under Section 73 must comply with the principles of natural justice.
  • Ex parte assessment orders must contain proper reasoning explaining the determination of tax liability.
  • High Courts can exercise writ jurisdiction where assessment proceedings violate natural justice, notwithstanding the existence of an alternative statutory remedy.
  • Fresh adjudication must be conducted by providing a meaningful opportunity of hearing and by passing a speaking order.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017
  • Section 73 of the Bihar Goods and Services Tax Act, 2017
  • Principles of Natural Justice
  • Form GST DRC-13 (Recovery Proceedings)

 

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1782895587_166compressed.pdf

 

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