Facts of the Case

The petitioner, Umakant Singh, resident of Katihar, Bihar, acting through his power of attorney holder, was assessed by the Deputy Commissioner of State Taxes, Katihar Circle, Katihar (Respondent No.3), by an order dated 31.01.2021, in Reference No. ZD100121027628Z, accompanied by a summary of the order in Form GST DRC-07 of the same date. The petitioner's appeal against this order was dismissed by the Additional Commissioner of State Taxes (Appeals), Purnea Division, by order dated 06.08.2021 in Appeal Case No. (ARN) AD100421001763W, with the summary of the demand issued in Form GST APL-04 on 07.08.2021. Both orders, according to the petitioner, were passed ex parte, in violation of the principles of natural justice. Aggrieved, the petitioner approached the Patna High Court by way of Civil Writ Jurisdiction Case No.4780 of 2022, seeking quashing of the original order, the DRC-07 summary, the appellate order, and the APL-04 summary.

Issues Involved

  1. Whether an ex parte assessment 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 31.01.2021 and the appellate order dated 06.08.2021 were passed ex parte, without affording the petitioner sufficient time to represent his case.
  • The orders 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 his 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 31.01.2021, the DRC-07 summary, the appellate order dated 06.08.2021, and the APL-04 summary, and remanded the matter for fresh adjudication.
  • The petitioner was directed to ensure the 10% pre-deposit for the appeal (stated to be already deposited) and to additionally deposit 10% of the demand 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 was directed to decide the matter afresh on merits, after hearing, preferably within two months, 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 assessment and appellate orders.
  • Bihar Goods and Services Tax Act, 2017 – the statute under which the assessment and appellate proceedings were conducted.
  • Form GST DRC-07 – summary of the demand issued pursuant to the assessment order.
  • Form GST APL-04 – summary of the order passed by the first appellate authority.

Decision – In Favour of

Disposed of with directions, broadly in favour of the assessee on the question of natural justice: the ex parte assessment and appellate orders were quashed and the matter remanded for a fresh decision on merits, subject to further pre-deposit conditions. 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.4780 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

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