Facts of the Case

  • Petitioner Identity: M/s Chandini Electricals, a proprietorship concern represented by its proprietor Mohammad Tahir, having its principal place of business at Sri Ram Place, Sahdeo Mahto Marg, Boring Road, S.K. Puri, Patna, Bihar.
  • GSTIN Details: The petitioner holds registration under GSTIN 10ABWPT9826A1ZF.
  • Impugned Order: The Assistant Commissioner of State Tax, Patna Central Division, Patna (Respondent No. 4) passed an assessment order dated 30.11.2021 under Section 73 of the Bihar Goods and Services Tax Act, 2017.
  • Demand Creation: Pursuant to the impugned assessment order, a tax demand notice amounting to ₹35,21,625/- was issued against the petitioner in Form GST DRC-07.
  • Grievance: The petitioner was assessed ex-parte without providing adequate and sufficient time/opportunity to represent their case, resulting in an unreasoned order that lacked clear grounds or justification for how the tax liability was quantified.
  • Consequential Actions: Consequent to the ex-parte assessment order, the bank accounts of the petitioner were attached/frozen by the tax authorities to realize the demanded liability.
  • Writ Filing: Aggrieved by the ex-parte order and coercive proceedings, the petitioner filed a writ petition (Civil Writ Jurisdiction Case No. 14044 of 2022) before the Hon'ble High Court of Judicature at Patna seeking quashing of the assessment order, de-freezing of bank accounts, and relief from coercive recovery actions.

Issues Involved

  1. Maintainability of Writ Petition: Whether the High Court can entertain a writ petition under Article 226 of the Constitution of India despite the availability of an alternative statutory appellate remedy when an order is passed in violation of the Principles of Natural Justice.
  2. Violation of Natural Justice: Whether the ex-parte assessment order dated 30.11.2021 passed under Section 73 of the Bihar GST Act, 2017 was unsustainable in law due to denial of fair and adequate opportunity of hearing.
  3. Validity of Non-Speaking Order: Whether an assessment order passed without assigning proper, decipherable reasons for determining tax liability is legally valid.
  4. De-attachment of Bank Accounts: Whether the attachment of bank accounts pursuant to an illegal/ex-parte assessment order is liable to be lifted.

Petitioner’s Arguments

  • Violation of Natural Justice: Counsel for the petitioner argued that the impugned assessment order dated 30.11.2021 was passed ex-parte without granting reasonable and sufficient opportunity of being heard or submitting relevant books of accounts.
  • Unreasoned Order: The assessing authority failed to record any decipherable reasons in the order explaining how the liability of ₹35,21,625/- was arrived at.
  • Arbitrary Coercive Recovery: Bank accounts were attached high-handedly, halting business operations without giving a proper hearing, which entails severe civil consequences for the taxpayer.
  • Relief Prayed: Quashing of the ex-parte assessment order dated 30.11.2021, issuance of directions to de-freeze/de-attach the bank account(s), and staying coercive recovery of the demand raised in Form GST DRC-07.

Respondent’s Arguments

  • Concession for Remand: The learned counsel representing the Revenue stated that the Department had no objection if the matter was remanded back to the Assessing Authority to decide the case afresh on merits.
  • Protection During Pendency: Revenue agreed that during the pendency of fresh adjudication, no coercive steps would be taken against the petitioner.

Court Order / Findings

The Division Bench comprising Hon'ble The Chief Justice Sanjay Karol and Hon'ble Mr. Justice S. Kumar disposed of the writ petition with the following directions:

  1. Writ Jurisdiction Scope: Held that the availability of a statutory remedy does not preclude the High Court from exercising writ jurisdiction where an order is ex facie bad in law owing to:
    • Violation of principles of natural justice (denial of fair opportunity).
    • Total lack of reasons/speaking order detailing the determination of tax liability.
  2. Quashing of Order: Set aside and quashed the impugned assessment order dated 30.11.2021 passed under Section 73 in GSTIN 10ABWPT9826A1ZF.
  3. Pre-Deposit Condition: Directed the petitioner to deposit 20% of the demand amount before the Assessing Officer within 4 weeks (subject to adjustment/set-off/refund depending on final adjudication).
  4. Immediate De-freezing: Directed the immediate de-freezing and de-attachment of the petitioner's bank accounts.
  5. Fresh Adjudication Mandate:
    • Directed the petitioner to appear before the Assessing Authority on 02.11.2022 at 10:30 A.M. (preferably in digital mode).
    • Directed the Assessing Authority to pass a reasoned, speaking order on merits after giving full opportunity to the petitioner to submit evidence/documents, ideally within a period of 2 months.
    • Expressly prohibited coercive steps against the petitioner during re-assessment proceedings.

Important Clarification

  • Jurisdictional Maintainability: The High Court clarified that alternative remedy is a rule of discretion, not an absolute bar. Where natural justice is breached or an order lacks logical reasoning, the High Court under Article 226 will readily intervene.
  • Requirement of Speaking Order: Even in ex-parte proceedings, assessing officers are duty-bound to record clear, decipherable reasons on facts and law to support their assessment rather than issuing arbitrary summary demands.

Section Involved

  • Section 73 of the Bihar Goods and Services Tax Act, 2017 / Central Goods and Services Tax Act, 2017: Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts.
  • Article 226 of the Constitution of India: Power of High Courts to issue certain writs for the enforcement of fundamental rights and for any other purpose (Writ Jurisdiction).

Link to download the order - https://mytaxexpert.co.in/uploads/1784615118_1552compressed.pdf

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