Facts of the Case

The petitioner, Jai Bajrang Krishi Vikash Kendra, challenged the ex parte assessment order dated 09.03.2020 passed under Section 73 of the Bihar Goods and Services Tax Act, 2017, along with the summary order issued in Form GST DRC-07. The petitioner also challenged the appellate order dated 29.08.2022 whereby the appeal against the assessment order was dismissed.

Consequently, proceedings for recovery were initiated, including attachment of the petitioner's bank account under Section 79 of the Central Goods and Services Tax Act, 2017 read with the corresponding provisions of the Bihar GST Act.

The petitioner approached the Patna High Court seeking quashing of the assessment order, appellate order, recovery proceedings, and bank account attachment on the ground that the assessment had been completed ex parte without granting an adequate opportunity of hearing.

 

Issues Involved

  1. Whether an ex parte assessment order passed under Section 73 without providing adequate opportunity of hearing violates the principles of natural justice.
  2. Whether the appellate order affirming such an assessment can be sustained.
  3. Whether recovery proceedings, including attachment of bank accounts under Section 79, can continue when the assessment order itself suffers from violation of natural justice.
  4. Whether the matter should be remanded for fresh adjudication after providing proper opportunity to the assessee.

 

Petitioner's Arguments

The petitioner submitted that:

  • The assessment proceedings were conducted ex parte without providing sufficient opportunity to present its case.
  • The assessment order did not assign proper reasons for determining the tax, interest, and penalty liability.
  • The appellate authority also rejected the appeal without properly considering the facts and circumstances of the case.
  • Since the assessment order itself was illegal and violative of the principles of natural justice, all consequential recovery proceedings including attachment of the petitioner's bank account deserved to be quashed.
  • The petitioner sought fresh adjudication after being granted an adequate opportunity to produce documents and submissions.

 

Respondent's Arguments

The Revenue fairly submitted before the High Court that:

  • It had no objection if the matter was remanded to the Assessing Authority for fresh adjudication.
  • Limitation should not come in the way of deciding the matter afresh.
  • The case may be decided on merits after providing proper opportunity to the petitioner.
  • During the pendency of fresh proceedings, no coercive action would be taken against the petitioner.

 

Court Order / Findings

The Patna High Court observed that although statutory remedies are ordinarily available, the High Court can exercise its writ jurisdiction where the impugned order is ex facie illegal and suffers from violation of the principles of natural justice.

The Court found that:

  • The petitioner was not afforded adequate opportunity of hearing.
  • The assessment order was passed ex parte.
  • The assessment order failed to assign sufficient reasons explaining how the tax liability had been determined.
  • The authorities failed to adjudicate all factual and legal issues arising in the matter.

Accordingly, the High Court:

  • Quashed the appellate order dated 29.08.2022.
  • Quashed the assessment order dated 09.03.2020.
  • Quashed the summary order issued in Form GST DRC-07.
  • Directed the petitioner to ensure compliance regarding statutory pre-deposit, including an additional deposit of 10% of the disputed demand before the Assessing Authority within four weeks.
  • Directed immediate de-freezing/de-attachment of the petitioner's bank account, if attached in connection with the impugned proceedings.
  • Directed the petitioner to appear before the Assessing Authority on the specified date.
  • Directed the Assessing Authority to decide the matter afresh strictly on merits after providing adequate opportunity of hearing.
  • Directed that a reasoned speaking order be passed after considering all relevant documents and submissions.
  • Ordered that no coercive action shall be taken during the pendency of the fresh proceedings.
  • Reserved liberty to the petitioner to challenge the fresh order in accordance with law.

 

Important Clarification

The judgment reiterates that:

  • An assessment order passed under Section 73 must comply with the principles of natural justice.
  • Merely passing an ex parte order without recording adequate reasons is unsustainable.
  • Even where proceedings are ex parte, the adjudicating authority must examine all factual and legal issues before determining tax liability.
  • Consequential recovery proceedings under Section 79, including bank attachment, cannot survive once the underlying assessment order is set aside.
  • Courts may interfere under Article 226 of the Constitution where assessment proceedings violate natural justice despite the availability of alternate statutory remedies.

 

Sections Involved

  • Article 226 of the Constitution of India
  • Section 73 of the Bihar Goods and Services Tax Act, 2017
  • Section 79 of the Central Goods and Services Tax Act, 2017
  • Corresponding provisions of the Bihar Goods and Services Tax Act, 2017
  • Form GST DRC-07

 

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1784614416_1607compressed.pdf

 

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