Facts of the Case

The petitioner, M/s Paliwal Drug Agencies, through its proprietor Om Prakash Paliwal, holding GSTIN 10ANSPP4398R1ZY, was assessed for the tax period 2018-19 by an order dated 09.03.2020 passed by the Assistant Commissioner of State Tax, Samastipur, Darbhanga, followed by a summary of order dated 14.03.2020 in Form GST DRC-07. The petitioner's appeal against this assessment (Appeal No. AD1003210018016) was rejected by the Joint Commissioner of State Taxes (Appeal), Darbhanga, vide order dated 26.11.2021, along with a summary demand dated 27.11.2021 in Form GST APL-04. Aggrieved that the appellate order was cryptic, misconceived and non-speaking, the petitioner approached the Patna High Court challenging both the appellate rejection and the underlying assessment.

Issues Involved

  1. Whether the appellate order rejecting the petitioner's appeal, being cryptic and non-speaking, was sustainable in law.
  2. Whether the original assessment order, passed ex parte, violated the principles of natural justice.
  3. Whether the writ court could interfere despite the availability of a statutory remedy where the order is ex facie bad in law.

Petitioner's Arguments

  • The appellate order dated 26.11.2021 was cryptic, misconceived and a non-speaking order that failed to deal with the grounds raised in appeal.
  • The underlying assessment order dated 09.03.2020 and the summary in Form GST DRC-07 were passed ex parte, without sufficient time being afforded to represent the petitioner's case.

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.
  • Undertook that no coercive steps would be taken against the petitioner during pendency of the remanded proceedings.

Court Order/Findings

  • Held that, notwithstanding the statutory remedy, the Court is not precluded from interfering where an order is ex facie bad in law.
  • Found the assessment order was passed in violation of principles of natural justice, as no sufficient time was afforded to the petitioner, and the order did not disclose reasons decipherable from the record for the amount determined.
  • Held that the authorities had not adjudicated the matter on the attending facts and circumstances, and all issues of fact and law ought to have been dealt with even in ex parte proceedings.
  • Quashed the appellate order dated 26.11.2021, the summary demand dated 27.11.2021, the assessment order dated 09.03.2020, and the summary of order dated 14.03.2020 in Form GST DRC-07.
  • Remanded the matter for fresh, reasoned decision after affording opportunity of hearing, subject to the petitioner depositing an additional 10% of the demand within four weeks (10% already stood deposited as appeal pre-deposit), with bank accounts to be de-frozen immediately and no coercive steps taken meanwhile.

Important Clarification

  • An ex parte assessment order that does not disclose reasons for the amount determined, coupled with a cryptic, non-speaking appellate order, amounts to a violation of natural justice that a writ court can correct notwithstanding the existence of an alternate statutory remedy.
  • Such a remand does not amount to a finding on the merits of the tax demand; all contentions of the parties are expressly left open for the Assessing Authority to decide afresh.

Sections Involved

  • Bihar Goods and Services Tax Act, 2017 — governs assessment and appellate proceedings referred to in the impugned orders.
  • Form GST DRC-07 — summary of the demand order issued under the Bihar GST Act, 2017 and the corresponding CGST Rules, 2017.
  • Form GST APL-04 — summary of the appellate order issued under the Bihar GST Act, 2017.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee. The impugned appellate and assessment orders were quashed on the short ground of violation of natural justice, and the matter was remanded for fresh adjudication on merits, subject to an additional pre-deposit condition. The Court expressly clarified it has not expressed any opinion on merits and all issues are left open.

Related Case Laws

No related case laws are available on this site at present.

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No. 4809 of 2022
  • Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date: 18.04.2022

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