Facts of the Case

The petitioner, M/s Hraday Kumar Yadav, a sole proprietorship firm at Piluwaha, P.S. Jadia, Supaul, Bihar, faced proceedings before the Assistant Commissioner of State Tax, Circle Supaul, on the ground that TDS reflected in a deductor's GSTR-7 had not been disclosed in the petitioner's return. This resulted in an order dated 08.03.2020 under Sections 73 and 74 of the Bihar Goods and Services Tax Act, 2017 read with Rule 142 of the BGST Rules, 2017, imposing tax, interest and penalty of Rs.80,639/- for alleged non-disclosure of accurate turnover for July 2019, along with a demand notice in Form GST DRC-07 of the same date. The petitioner's appeal against this order was dismissed by the Additional Commissioner (Appeal), Purnea Division, by order dated 05.02.2021 solely on the ground of limitation, without a decision on merits. The petitioner approached the Patna High Court against both orders.

Issues Involved

  1. Whether an ex-parte tax order raising demand on a GSTR-7 TDS mismatch, without adequate hearing, is sustainable.
  2. Whether an appellate authority can dismiss an appeal purely on limitation without addressing it on merits, in the facts of the case.
  3. Whether writ jurisdiction can be invoked despite an available statutory remedy where the order is ex facie bad in law.

Petitioner's Arguments

  • The order dated 08.03.2020 and the DRC-07 demand of Rs.80,639/- were passed without proper opportunity of hearing on the GSTR-7 TDS mismatch allegation.
  • The appellate rejection dated 05.02.2021 on the ground of limitation deprived the petitioner of an adjudication on merits.
  • Coercive recovery through bank attachment ought to be restrained pending resolution of the dispute.

Respondent's Arguments

  • Counsel for the Revenue did not object to a remand for fresh decision on merits, and agreed that limitation should not stand in the way of a fresh adjudication.
  • The Revenue undertook that no coercive steps would be taken against the petitioner while the remanded proceedings were pending.

Court Order/Findings

  • The Court held that it is not precluded from interfering in writ jurisdiction, despite the statutory remedy, where an order is ex facie bad in law.
  • The impugned order violated principles of natural justice — insufficient time was afforded to represent the case, and no reasons were decipherable as to computation of liability.
  • The authorities had failed to adjudicate the matter on the attending facts and circumstances even in ex parte proceedings.
  • Both the order dated 05.02.2021 (rejecting the appeal on limitation) and the order dated 08.03.2020 with its DRC-07 summary were quashed and set aside, and the matter remanded for a fresh, reasoned decision, with limitation not to come in the way.
  • The Court accepted the 10% pre-deposit already made and directed an additional 10% deposit within four weeks, with bank accounts de-frozen immediately.

Important Clarification

  • Where an appellate authority disposes of an appeal purely on limitation without recording reasons that engage with the merits and the underlying order itself suffers from a natural-justice violation, the writ court may quash both the assessment and the appellate rejection together and direct that limitation not obstruct a fresh hearing.

Sections Involved

  • Section 73, Bihar Goods and Services Tax Act, 2017 — determination of tax not paid for reasons other than fraud or wilful misstatement.
  • Section 74, Bihar Goods and Services Tax Act, 2017 — determination of tax not paid by reason of fraud, wilful misstatement or suppression.
  • Form GST DRC-07 — summary of the demand order under the GST law.

Decision – In Favour of

Disposed of with directions, substantially in favour of the Assessee — both the assessment order and the limitation-based appellate rejection were quashed and the matter remanded for fresh adjudication on merits, subject to an additional 10% pre-deposit.

Related Case Laws

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

Case Details

  • Court: Patna High Court
  • Case No.: Civil Writ Jurisdiction Case No. 4181 of 2022
  • Coram: Hon'ble The Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 05 April 2022

Link to Download the Order

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