Facts of the Case

The petitioner, M/s Singh Construction, challenged the appellate order dated 28.02.2022 passed by the Additional Commissioner of State Tax (Appeals), Patna West Division, whereby multiple GST appeals filed against assessment orders dated 05.03.2020 and 07.03.2020 were dismissed. The petitioner contended that both the assessment orders and the appellate order had been passed ex parte, without providing an effective opportunity of hearing and in violation of the principles of natural justice.

During the hearing before the Patna High Court, the Revenue fairly stated that it had no objection if the matter was remanded to the Assessing Authority for fresh adjudication on merits and assured that no coercive action would be taken during the pendency of the proceedings.

 Issues Involved

  1. Whether an ex parte GST assessment order passed without granting adequate opportunity of hearing is sustainable in law.
  2. Whether the appellate order affirming such assessment without addressing the violation of natural justice is legally valid.
  3. Whether the High Court can exercise writ jurisdiction despite the existence of an alternative statutory remedy when the impugned orders suffer from violation of natural justice.
  4. Whether a speaking order assigning proper reasons is mandatory in GST adjudication proceedings.

 Petitioner's Arguments

  • The assessment proceedings were concluded without providing sufficient opportunity to present its defence.
  • Both the assessment orders and the appellate order were passed ex parte, violating the principles of natural justice.
  • The impugned orders did not disclose any reasons explaining how the tax liability had been determined.
  • The authorities failed to consider the factual and legal issues involved before confirming the demand.
  • Consequently, the impugned orders deserved to be quashed and the matter remanded for fresh adjudication after granting a fair hearing.

 Respondent's Arguments

  • The Revenue submitted that it had no objection if the matter was remanded to the Assessing Authority for fresh consideration.
  • It was further submitted that the case could be decided afresh on merits after granting due opportunity to the petitioner.
  • The Revenue also assured the Court that no coercive action would be taken against the petitioner during the pendency of the fresh proceedings.

 Court Order / Findings

The Patna High Court held that although an alternative statutory remedy existed, the High Court could exercise its writ jurisdiction where the impugned orders were ex facie illegal due to violation of the principles of natural justice.

The Court observed that:

  • The petitioner had not been afforded a fair and adequate opportunity of hearing.
  • The assessment and appellate orders had been passed ex parte.
  • The impugned orders did not assign any reasons explaining the determination of tax liability.
  • Even an ex parte order must deal with the relevant facts and legal issues and must contain proper reasons.
  • Orders resulting in civil consequences must strictly comply with the principles of natural justice.

Accordingly, the Court:

  • Quashed the assessment orders dated 05.03.2020 and 07.03.2020 as well as the appellate order dated 28.02.2022.
  • Directed the petitioner to deposit 10% of the disputed demand, over and above the amount already deposited, within four weeks.
  • Directed immediate de-freezing/de-attachment of the petitioner's bank accounts, if attached.
  • Directed the Assessing Authority to provide adequate opportunity of hearing and decide the matter afresh on merits.
  • Directed that the fresh order shall be a speaking order assigning proper reasons.
  • Directed that no coercive action shall be taken during the pendency of the fresh proceedings.
  • Clarified that it had expressed no opinion on the merits of the dispute and left all issues open.

Important Clarification

  • Violation of the principles of natural justice is an independent ground for interference by the High Court under Article 226 even where an alternative statutory remedy is available.
  • Ex parte GST assessment orders must contain adequate reasoning and cannot merely determine tax liability without discussing the factual and legal basis.
  • Assessing Authorities are required to pass reasoned speaking orders after granting sufficient opportunity of hearing.
  • During remanded proceedings, taxpayers are entitled to place all relevant documents and evidence before the Assessing Authority.
  • Excess deposit, if any, shall be refunded in accordance with the final adjudication.

 Sections Involved

  • Article 226 of the Constitution of India
  • Section 73 of the Central Goods and Services Tax Act, 2017
  • Section 73 of the Bihar Goods and Services Tax Act, 2017
  • Section 107 of the Central Goods and Services Tax Act, 2017
  • Section 107 of the Bihar Goods and Services Tax Act, 2017
  • Principles of Natural Justice

Link to download the order-https://mytaxexpert.co.in/uploads/1783924743_4020compressed.pdf

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