Facts of the Case

The petitioner, Rohan Raj, proprietor of Saanvi Automobiles, challenged an ex parte assessment order dated 18.02.2021 along with the consequential demand order in Form GST DRC-07 issued by the Assistant Commissioner of State Tax for the tax period April 2019 to March 2020.

Under the assessment order, GST along with interest and penalty amounting to Rs. 7,66,411.32 was demanded. The petitioner contended that the assessment had been completed without granting a reasonable opportunity of hearing and that the order had been passed ex parte without proper adjudication of the facts.

The petitioner also sought de-freezing of his bank accounts and refund of the amount already recovered by the department.

 

Issues Involved

  1. Whether an ex parte GST assessment order passed without granting adequate opportunity of hearing is sustainable in law.
  2. Whether an assessment order lacking proper reasoning violates the principles of natural justice.
  3. Whether the High Court can exercise its writ jurisdiction despite the availability of an alternative statutory remedy.
  4. Whether the matter should be remanded for fresh adjudication after providing proper opportunity to the taxpayer.

 

Petitioner's Arguments

The petitioner submitted that:

  • The assessment order had been passed ex parte without providing sufficient opportunity to present his case.
  • The assessment order failed to assign adequate reasons for determining the tax liability.
  • The demand raised through Form GST DRC-07 was arbitrary and contrary to law.
  • The bank accounts had been attached and the disputed amount had already been recovered.
  • The assessment proceedings violated the principles of natural justice.
  • The matter deserved to be remanded for fresh adjudication after granting a fair hearing.

 

Respondent's Arguments

The Revenue fairly submitted before the Court that it had no objection if the matter was remanded to the Assessing Authority for fresh adjudication on merits.

The Department also agreed that:

  • The matter could be reconsidered afresh.
  • The petitioner should be granted an opportunity of hearing.
  • No coercive action would be taken during the pendency of fresh proceedings.

 

Court Order / Findings

The Patna High Court observed that although a statutory appellate remedy existed, the High Court could exercise its writ jurisdiction where an order is ex facie illegal and suffers from violation of the principles of natural justice.

The Court held that:

  • The petitioner had not been afforded a fair and reasonable opportunity of hearing.
  • The assessment order was passed ex parte.
  • The order did not disclose sufficient reasons explaining how the tax liability had been determined.
  • Even while passing an ex parte order, the Assessing Authority is required to examine all relevant facts and applicable law before determining liability.
  • Since the order resulted in serious civil consequences and violated the principles of natural justice, judicial interference was justified.

Accordingly, the High Court:

  • Quashed the assessment order dated 18.02.2021 and the consequential demand in Form GST DRC-07.
  • Directed the Assessing Authority to conduct fresh adjudication on merits.
  • Directed that adequate opportunity of hearing be provided.
  • Ordered de-freezing of the petitioner's attached bank accounts.
  • Directed that if any excess amount had been recovered, the same should be refunded within two months after the fresh order, if found refundable.
  • Directed the Assessing Authority to pass a detailed speaking order.
  • Directed that no coercive action be taken during the pendency of the fresh proceedings.
  • Clarified that all questions of fact and law remain open.

 

Important Clarification

This judgment reiterates the settled principle that:

  • An ex parte GST assessment cannot be sustained merely because the taxpayer did not appear.
  • The Assessing Authority must independently examine all facts, documents and applicable law before determining tax liability.
  • Every assessment order must be a reasoned and speaking order.
  • Violation of natural justice permits the High Court to exercise writ jurisdiction even when an alternative statutory remedy is available.
  • Attachment of bank accounts arising from an invalid assessment cannot continue once the assessment itself is quashed.
  • Fresh adjudication must strictly comply with the principles of natural justice.

 

Sections Involved

  • Section 73, Central Goods and Services Tax Act, 2017
  • Section 73, Bihar Goods and Services Tax Act, 2017
  • Form GST DRC-07
  • Article 226 of the Constitution of India
  • Principles of Natural Justice


Link to download the order -

https://www.mytaxexpert.co.in/uploads/1784614347_1603compressed.pdf

 

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