Facts of the Case

M/s Maa Shyampati Construction challenged the order passed by the Additional Commissioner of State Taxes (Appeal), whereby its GST appeals were dismissed at the admission stage solely on the ground of limitation. The petitioner also sought quashing of the ex parte assessment orders and demand notices issued by the Assistant Commissioner of State Taxes under Section 73(9) of the GST Act, resulting in cancellation of registration and substantial tax, interest, and penalty demands.

The petitioner contended that the assessment orders had been passed without granting an adequate opportunity of hearing and were non-speaking orders. It was also argued that the delay in filing appeals occurred due to the restrictions prevailing during the COVID-19 pandemic.

Issues Involved

  1. Whether dismissal of GST appeals merely on the ground of limitation was justified in the circumstances of the case.
  2. Whether ex parte assessment orders passed without adequate opportunity of hearing violated the principles of natural justice.
  3. Whether non-speaking assessment orders determining tax liability could be sustained in law.
  4. Whether the High Court could exercise writ jurisdiction despite the availability of statutory remedies.

Petitioner's Arguments

  • The appellate authority rejected the appeals only on the ground of delay without considering the exceptional circumstances arising out of the COVID-19 pandemic.
  • The assessment orders were passed ex parte without providing sufficient opportunity to present evidence or submissions.
  • The impugned orders were non-speaking and did not disclose the basis for determining the tax demand.
  • Since the orders violated the principles of natural justice and resulted in serious civil consequences, judicial interference under Article 226 of the Constitution was warranted.

Respondents' Arguments

  • During the hearing, counsel appearing for the Revenue fairly submitted that the matter could be remanded to the Assessing Authority for fresh adjudication on merits.
  • It was also stated that no coercive action would be taken against the petitioner during the pendency of fresh proceedings before the Assessing Authority.

Court Order / Findings

The Patna High Court held that although statutory remedies ordinarily exist under the GST Act, the High Court is empowered to interfere where the impugned orders are ex facie illegal and violate the principles of natural justice.

The Court observed that:

  • No adequate opportunity of hearing had been granted to the petitioner.
  • The assessment orders were passed ex parte.
  • The orders were non-speaking and failed to assign reasons explaining how the tax liability had been determined.
  • The delay in filing the appeals stood sufficiently explained due to the COVID-19 restrictions.

Accordingly, the Court:

  • Quashed the appellate orders dismissing the appeals on limitation.
  • Set aside the ex parte assessment orders and demand notices.
  • Directed the petitioner to comply with the required statutory deposits.
  • Ordered de-freezing/de-attaching of the petitioner's bank accounts, if attached.
  • Directed the Assessing Authority to conduct fresh adjudication strictly in accordance with the principles of natural justice.
  • Directed that adequate opportunity of hearing be granted.
  • Ordered that a fresh speaking order containing detailed reasons be passed.
  • Directed that no coercive action be taken during the pendency of fresh proceedings.
  • Clarified that it had not expressed any opinion on the merits of the case and left all issues open for fresh adjudication.

Important Clarification

This judgment reiterates that GST assessment orders passed ex parte without providing a fair opportunity of hearing and without recording proper reasons are unsustainable in law. The High Court also recognised the impact of the COVID-19 pandemic while considering delay in filing appeals and reaffirmed that violation of natural justice is an independent ground for exercising writ jurisdiction notwithstanding the existence of alternate statutory remedies.

Sections Involved

  • Section 73(9) of the Central Goods and Services Tax Act, 2017
  • Principles of Natural Justice
  • Appellate Provisions relating to limitation under the GST Act

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785402060_2368compressed.pdf

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