Facts of the Case

The petitioner challenged two assessment orders passed by the Assistant Commissioner, State Tax, Motihari Circle under Section 74 of the Bihar Goods and Services Tax Act, 2017 along with the consequential GST DRC-07 summary orders.

The impugned orders imposed tax, interest, and penalty for different tax periods without granting the petitioner an effective opportunity of hearing. The petitioner contended that the assessment proceedings were completed ex-parte and without proper consideration of the facts.

The petitioner further submitted that all pending GST returns had subsequently been filed and the applicable tax, interest, and penalty had been deposited. Therefore, the matter deserved reconsideration after providing a reasonable opportunity of hearing.

The Revenue also expressed no objection before the High Court if the matter was remanded to the Assessing Authority for fresh adjudication on merits.

 Issues Involved

  1. Whether assessment orders passed under Section 74 without providing adequate opportunity of hearing are legally sustainable.
  2. Whether ex-parte GST assessment orders lacking reasons violate the principles of natural justice.
  3. Whether the High Court can interfere despite the availability of an alternative statutory remedy when there is violation of natural justice.
  4. Whether the matter should be remanded for fresh adjudication.

 Petitioner's Arguments

The petitioner submitted that:

  • The assessment orders were passed without granting sufficient opportunity of hearing.
  • The proceedings were conducted ex-parte.
  • The impugned orders were non-speaking and did not disclose the basis for determining tax liability.
  • The petitioner had subsequently filed all pending GST returns and discharged the tax liability along with applicable interest and penalty.
  • The matter deserved fresh consideration after granting adequate opportunity of hearing.
  • The consequential DRC-07 orders were also liable to be quashed.

 Respondent's Arguments

The State submitted that:

  • It had no objection if the matter was remanded to the Assessing Authority.
  • The assessment could be decided afresh strictly on merits.
  • During pendency of the fresh proceedings, no coercive action would be taken against the petitioner.

 Court Findings / Order

The Patna High Court held that the existence of an alternative statutory remedy does not prevent the High Court from exercising writ jurisdiction where the impugned order is ex facie illegal due to violation of principles of natural justice.

The Court observed that:

  • Adequate opportunity of hearing had not been provided.
  • The assessment orders were passed ex-parte.
  • The orders did not assign proper reasons explaining the determination of tax liability.
  • Even in ex-parte proceedings, the adjudicating authority is required to examine facts, consider evidence, and pass a reasoned speaking order.
  • Orders resulting in civil consequences cannot be sustained if passed in violation of natural justice.

Accordingly, the Court:

  • Quashed both assessment orders.
  • Quashed the corresponding GST DRC-07 summary orders.
  • Directed the Assessing Authority to adjudicate the matter afresh on merits.
  • Directed that adequate opportunity of hearing be granted.
  • Ordered the Assessing Authority to pass a reasoned speaking order.
  • Directed de-freezing/de-attachment of the petitioner's bank accounts, if attached.
  • Ordered that no coercive action be taken during the pendency of fresh proceedings.
  • Directed that excess deposit, if any, be refunded within two months after fresh adjudication.
  • Clarified that all issues were left open without expressing any opinion on merits.

 Important Clarification

This judgment reiterates that:

  • An ex-parte GST assessment cannot survive if passed without providing an effective opportunity of hearing.
  • A speaking order assigning proper reasons is mandatory under GST law.
  • The High Court can exercise writ jurisdiction despite the availability of an appellate remedy where there is a clear breach of natural justice.
  • GST authorities must independently evaluate facts and evidence before confirming tax demands.
  • Mere issuance of notices is not sufficient unless a meaningful opportunity of hearing is actually afforded.
  • Attachment of bank accounts may also be lifted where the foundational assessment order is set aside.

Sections Involved

  • Section 74 of the Bihar Goods and Services Tax Act, 2017
  • Form GST DRC-07
  • Principles of Natural Justice
  • Ex-parte Assessment Proceedings
  • Speaking Order Requirement

Link to Download the Order-https://mytaxexpert.co.in/uploads/1783922276_4010compressed.pdf

 Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.