Facts of the Case

The petitioner, M/s K.K.K.O. Brand, operating through its Proprietor Nand Kishor Singh, filed a writ petition under Article 226 of the Constitution of India before the High Court of Judicature at Patna. The writ challenged the ex-parte assessment order dated 02.12.2021 passed by Respondent No. 3 (Joint Commissioner of State Tax, Shahabad Circle, Ara) alongside the summary of the order issued in Form GST DRC-07 dated 02.12.2021. Under the impugned order, the petitioner’s claim for Input Tax Credit (ITC) was rejected, and a total tax demand amounting to ₹31,24,842.00—inclusive of interest and penalty—was levied against the petitioner without affording an opportunity to present its case.

Issues Involved

  • Whether the ex-parte order dated 02.12.2021 and Form GST DRC-07 passed under Section 73(9) of the BGST Act and Rule 142(5) of the BGST Rules violated the principles of natural justice due to lack of opportunity of hearing?
  • Whether the High Court can exercise its writ jurisdiction under Article 226 despite the availability of an alternative statutory remedy when an assessment order is ex-facie bad in law, non-speaking, and lacking sufficient reasons?

Petitioner’s Arguments

  • Violation of Natural Justice: The impugned assessment order dated 02.12.2021 was passed ex-parte without providing a reasonable or sufficient opportunity of hearing to represent the case.
  • Cryptic and Non-Speaking Order: The order passed by Respondent No. 3 was highly cryptic, misconceived, and non-speaking as it failed to provide decipherable reasons on how the demand was computed.
  • Relief Sought: Quashing of the ex-parte order and Form GST DRC-07, declaring the order void, and seeking protection against any coercive steps/recovery by the tax department during the pendency of the proceedings.

Respondent’s Arguments

  • The learned counsel representing the State/Revenue offered no objection to remanding the matter back to the Assessing Authority to decide the case fresh on its merits.
  • The Revenue accepted that no coercive steps would be initiated against the petitioner during the pendency of the fresh assessment proceedings.

Court’s Findings & Final Order

The Patna High Court observed that the presence of an alternative statutory remedy does not bar the High Court from exercising writ jurisdiction where an order is ex-facie bad in law due to:

  1. Violation of Principles of Natural Justice: Failure to grant a fair opportunity of hearing or sufficient time.
  2. Absence of Reasons: An ex-parte order that fails to record clear, decipherable reasons regarding how the liability was determined entails civil consequences and cannot stand.

Key Directions Issued by the Court:

  • Quashing of Order: Quashed the impugned ex-parte order dated 02.12.2021 and summary order in Form GST DRC-07.
  • Pre-deposit Condition: Directed the petitioner to deposit 20% of the demand amount before the Assessing Officer within 4 weeks without prejudice to their rights. (If found in excess ultimately, the amount is to be refunded within two months).
  • De-freezing Bank Accounts: Directed immediate de-freezing/de-attaching of the petitioner's bank accounts if attached.
  • Appearance & Fresh Hearing: Directed the petitioner to appear before the Assessing Authority on 02.11.2022 (digitally, if possible). The Assessing Authority must pass a reasoned/speaking order on merits expeditiously, preferably within two months, after giving full opportunity to submit documents.
  • Protection against Coercion: No coercive steps shall be taken against the petitioner during the pendency of the remanded proceedings.

Important Clarification

The High Court clarified that it expressed no opinion on the merits of the case, leaving all substantive issues open for determination by the Assessing Officer. The key principle reiterated is that any tax assessment order that imposes civil consequences must strictly comply with natural justice and must be supported by clear, speaking reasons; failure to do so renders the order void ab initio, justifying direct writ intervention despite alternative remedies.

Sections Involved:

    • Section 73(9) of the Bihar Goods and Services Tax Act, 2017 (BGST Act)
    • Rule 142(5) of the Bihar Goods and Services Tax Rules, 2017 (BGST Rules)

Link to download the order - https://mytaxexpert.co.in/uploads/1784616851_1566compressed.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.