Facts of the Case

The petitioner, Kamlesh Kumar, resident of Saharsa, Bihar, was assessed by the Assistant Commissioner of State Tax, Saharsa (Respondent No.6), by an order dated 03.03.2021, in Reference No. ZD1003210007482, accompanied by a summary of the demand in Form GST DRC-07 of the same date. The order, according to the petitioner, was passed ex parte. No appellate proceedings against this order are referred to in the record. Aggrieved, the petitioner approached the Patna High Court by way of Civil Writ Jurisdiction Case No.5943 of 2022, seeking quashing of the order and the DRC-07 summary.

Issues Involved

  1. Whether an ex parte demand order passed without sufficient opportunity of hearing, and without discernible reasons, can be sustained.
  2. Whether the High Court, in writ jurisdiction, can interfere despite the availability of a statutory appellate remedy where the impugned order is ex facie bad in law.

Petitioner's Arguments

  • The order dated 03.03.2021 was passed ex parte, without affording the petitioner sufficient time to represent her case.
  • The order did not disclose reasons sufficient to explain how the tax liability was computed.
  • The proceedings, being in violation of the principles of natural justice, were liable to be quashed and the matter remanded for fresh adjudication.

Respondent's Arguments

  • Learned counsel for the Revenue stated he had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits.
  • The Revenue agreed that no coercive steps would be taken against the petitioner during the pendency of the remanded proceedings.

Court Order/Findings

  • The Court held that, notwithstanding the statutory remedy of appeal, it is not precluded from interfering in writ jurisdiction where an order is ex facie bad in law.
  • It found two infirmities: (a) violation of natural justice, as no sufficient time was afforded to the petitioner to represent her case; and (b) the order, being ex parte, did not assign reasons decipherable from the record as to how the tax due was determined.
  • An ex parte order passed in violation of natural justice entails civil consequences and, on this ground alone, is liable to be quashed.
  • The Court quashed the order dated 03.03.2021 and the DRC-07 summary, and remanded the matter for fresh adjudication.
  • The petitioner was directed to deposit 20% of the demand raised before the Assessing Officer within four weeks; bank accounts attached in connection with the proceedings were directed to be de-frozen immediately.
  • The Assessing Authority (Joint Commissioner of State Tax, Saharsa) was directed to decide the matter afresh on merits, after hearing, preferably within two months from the petitioner's appearance on 16.05.2022, by a speaking order; no coercive steps were to be taken meanwhile, and liberty was reserved to challenge the fresh order.

Important Clarification

  • An order passed ex parte, without reasons that can be deciphered from the record as to how the demand was computed, is bad in law regardless of the availability of an appellate remedy.
  • The existence of an alternative statutory remedy does not bar writ jurisdiction where the impugned order is ex facie vitiated by a breach of natural justice.
  • Even in ex parte proceedings, the adjudicating authority must deal with all issues of fact and law before determining tax liability.

Sections Involved

  • Article 226 of the Constitution of India – invoked for writ jurisdiction to challenge the demand order.
  • Bihar Goods and Services Tax Act, 2017 – the statute under which the assessment proceedings were conducted.
  • Form GST DRC-07 – summary of the demand issued pursuant to the assessment order.

Decision – In Favour of

Disposed of with directions, broadly in favour of the assessee on the question of natural justice: the ex parte demand order was quashed and the matter remanded for a fresh decision on merits, subject to a 20% pre-deposit. The Court expressly did not express any opinion on the merits of the tax demand itself, leaving all issues open for the Assessing Authority to decide afresh.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: CWJC No.5943 of 2022
  • Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 25.04.2022

Link to Download the Order

Download the full judgment (PDF)

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