Facts of the Case

The petitioner, M/s. Livguard Energy Technologies Pvt. Ltd., challenged the assessment order dated 24.02.2021 along with the corresponding Form GST DRC-07, whereby a GST demand of ₹86,36,856 was raised for the tax period April 2019 to March 2020. The petitioner contended that the assessment order had been passed without granting an effective opportunity of hearing and without properly considering the reply submitted to the show cause notice. The petitioner further argued that the order violated the statutory safeguards contained in the Bihar GST Act relating to adjudication proceedings.

Issues Involved

  1. Whether the assessment order passed without granting an adequate opportunity of hearing was sustainable in law.
  2. Whether the adjudicating authority violated the principles of natural justice while passing the ex parte assessment order.
  3. Whether the assessment order was contrary to the requirements prescribed under Section 75(4) and Section 75(5) of the Bihar Goods and Services Tax Act, 2017.
  4. Whether the matter deserved to be remanded for fresh adjudication.

Petitioner’s Arguments

  • The petitioner submitted that although a reply to the show cause notice had been filed, the same was not duly considered before passing the assessment order.
  • It was argued that no meaningful opportunity of personal hearing was granted before creation of the tax demand.
  • The petitioner contended that the impugned order violated Section 75(4) and Section 75(5) of the Bihar GST Act.
  • The order was challenged as being an ex parte order passed in violation of the principles of natural justice and without assigning proper reasons for determination of tax liability.

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 on merits.
  • The respondents also agreed that no coercive action should be taken against the petitioner during the pendency of the fresh proceedings.

Court Order / Findings

The Patna High Court observed that although an alternative statutory remedy existed, the Court could exercise its writ jurisdiction where the impugned order was patently illegal.

The Court found that:

  • The petitioner was not afforded a sufficient opportunity to present its case.
  • The assessment order was passed ex parte without recording adequate reasons for determining the tax liability.
  • The order violated the principles of natural justice and resulted in serious civil consequences.
  • The adjudicating authority failed to properly examine the facts and law involved in the matter.

Accordingly, the Court:

  • Quashed the assessment order dated 24.02.2021 and the corresponding Form GST DRC-07.
  • Directed the petitioner to deposit 20% of the disputed demand within four weeks, subject to adjustment if already deposited.
  • Directed immediate de-freezing/de-attachment of the petitioner's bank account, if attached.
  • Directed the petitioner to appear before the Assessing Authority.
  • Directed the Assessing Authority to provide adequate opportunity of hearing, consider all documents, pass a reasoned speaking order, and decide the matter expeditiously.
  • Ordered that no coercive action be taken during the pendency of the fresh assessment proceedings.
  • Clarified that all issues on merits remained open for fresh consideration.

Important Clarification

This judgment reiterates that:

  • Adequate opportunity of hearing is mandatory before passing an assessment order under GST law.
  • Ex parte assessment orders lacking proper reasoning are liable to be set aside.
  • A speaking order supported by reasons is an essential requirement of valid adjudication.
  • High Courts may exercise writ jurisdiction despite availability of an appellate remedy where there is a clear violation of the principles of natural justice.
  • Authorities must strictly comply with the procedural safeguards contained in Section 75(4) and Section 75(5) of the Bihar Goods and Services Tax Act, 2017.

Section Involved

  • Section 75(4) – Opportunity of Hearing
  • Section 75(5) – Adjournment and Adjudication Procedure
  • Form GST DRC-07
  • Bihar Goods and Services Tax Act, 2017

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785313528_2191compressed.pdf

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