Facts of the Case

The petitioner, M/s Sky S Mart, challenged the assessment order dated 30.11.2021 passed by the Assistant Commissioner of State Taxes under Section 73(9) of the Bihar GST Act, 2017, whereby a demand of ₹4,61,939, including tax, interest, and penalty, was raised.

The petitioner contended that the assessment order and the corresponding GST DRC-07 demand notice were issued without serving any proper Show Cause Notice and without providing an adequate opportunity of hearing, thereby violating the principles of natural justice. During recovery proceedings, the bank accounts of the petitioner and its proprietor were also attached.

 Issues Involved

  1. Whether an assessment order under Section 73(9) of the Bihar GST Act, 2017 can be sustained when passed without issuing a valid Show Cause Notice.
  2. Whether an assessment order passed without providing adequate opportunity of hearing violates the principles of natural justice.
  3. Whether attachment of the taxpayer's bank account pursuant to such an order is legally sustainable.
  4. Whether the High Court can exercise writ jurisdiction despite the availability of an alternative statutory remedy.

 Petitioner's Arguments

  • The assessment order was passed without issuance of any valid Show Cause Notice.
  • No sufficient opportunity of hearing was granted before creating the tax demand.
  • The impugned order was an ex parte order and lacked proper reasoning.
  • Attachment of the bank account was illegal since the underlying demand itself was unsustainable.
  • The assessment proceedings violated the fundamental principles of natural justice.

 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.
  • It was also agreed that the case should be decided on merits after granting proper opportunity to the petitioner.
  • The Revenue further agreed that no coercive action would be taken during the pendency of fresh proceedings.

 Court Order / Findings

The Patna High Court held that the writ petition was maintainable despite the existence of an alternative statutory remedy because the impugned order suffered from serious violations of the principles of natural justice.

The Court observed that:

  • Adequate opportunity of hearing had not been granted.
  • The assessment order was passed ex parte.
  • The order did not disclose any proper reasons explaining how the tax liability had been determined.

Accordingly, the Court:

  • Quashed the assessment order dated 30.11.2021.
  • Directed the petitioner to deposit 20% of the disputed demand within four weeks, without prejudice to its rights.
  • Directed immediate de-freezing/de-attachment of the petitioner's bank accounts.
  • Directed the Assessing Authority to conduct fresh adjudication strictly in accordance with the principles of natural justice.
  • Directed that a speaking order be passed after granting adequate opportunity of hearing.
  • Ordered that no coercive action shall be taken during the fresh adjudication proceedings.
  • Granted liberty to both parties to avail further remedies available under law.

 Important Clarification

This judgment reiterates that:

  • Assessment proceedings under Section 73 cannot be completed without proper Show Cause Notice and adequate opportunity of hearing.
  • Ex parte GST orders lacking reasons are liable to be quashed.
  • Violation of natural justice enables the High Court to exercise writ jurisdiction even where statutory appellate remedies exist.
  • Recovery proceedings, including attachment of bank accounts based on such defective orders, cannot continue once the assessment is set aside.
  • Fresh adjudication must always culminate in a reasoned and speaking order after considering the taxpayer's submissions.

 Section Involved

  • Section 73(9) of the Bihar Goods and Services Tax Act, 2017

Link to Download the Order

https://mytaxexpert.co.in/uploads/1785138023_2028compressed.pdf

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