Facts of the Case

The petitioner, M/s Hraday Kumar Yadav, a sole proprietorship firm based at Piluwaha, Supaul, Bihar, represented by its proprietor Mr. Hraday Kumar Yadav, was subjected to proceedings under Section 73 and 74 of the Bihar Goods and Services Tax Act, 2017 read with Rule 142 of the BGST Rules, 2017. The Assistant Commissioner of State Tax, Circle Supaul, passed an order dated 08.03.2020 (reference no. ZA100320011525J) raising a tax demand of Rs.31,380/- along with interest and penalty, on the ground that TDS reflected in GSTR-7 of a deductor had not been disclosed by the petitioner in its own return. A corresponding demand notice in Form GST DRC-07 dated 08.03.2020 was also issued. The petitioner's appeal against this order was rejected by the Additional Commissioner (Appeal), Purnea Division, vide order dated 05.02.2021, solely on the ground of limitation. Aggrieved, the petitioner approached the Patna High Court by way of Civil Writ Jurisdiction Case No.4153 of 2022, also seeking a restraint on issuance of Form GST DRC-13 for recovery through bank attachment.

Issues Involved

  1. Whether the appellate order dismissing the appeal solely on limitation, without addressing the merits, was sustainable.
  2. Whether the original assessment order under Sections 73/74 BGST Act, passed ex parte without assigning reasons, violated principles of natural justice.
  3. Whether the writ court could interfere despite availability of statutory remedies.

Petitioner's Arguments

  • The order dated 08.03.2020 was passed ex parte without affording sufficient opportunity of hearing.
  • No reasons were recorded explaining how the tax liability of Rs.31,380/- was computed, despite the dispute over unclaimed TDS reflected in a deductor's GSTR-7.
  • The appellate authority mechanically rejected the appeal on limitation without examining the underlying facts.
  • Coercive recovery through bank attachment (Form GST DRC-13) ought to be restrained pending adjudication.

Respondent's Arguments

  • Learned counsel for the Revenue did not oppose a remand, stating no objection to the matter being sent back to the Assessing Authority for a fresh decision on merits.
  • The Revenue agreed that the question of limitation would not be pressed and that no coercive steps would be taken during pendency.

Court Order/Findings

  • The Division Bench held that despite the availability of a statutory remedy, the writ court is not precluded from interfering where an order is ex facie bad in law.
  • The order was found vitiated for (a) violation of natural justice, as no sufficient opportunity of hearing was afforded, and (b) being passed ex parte without any sufficient reasons decipherable from the record as to how the tax liability was determined.
  • The authorities had also failed to adjudicate the matter on the attending facts and circumstances.
  • The Court quashed both the appellate order dated 05.02.2021 and the original order dated 08.03.2020 along with the summary in Form GST DRC-07.
  • The matter was remanded with conditional pre-deposit terms — 10% already stated as deposited for the appeal, plus an additional 10% of the demand to be deposited within four weeks before the Assessing Officer.
  • Bank accounts attached in connection with the proceedings were directed to be de-frozen immediately, and no coercive steps were to be taken during pendency of the fresh proceedings.

Important Clarification

  • An order under Section 73/74 BGST Act passed without recording reasons, and without granting adequate hearing, is liable to be set aside regardless of any statutory limitation bar on the appeal.
  • The writ court's jurisdiction under Article 226 remains available notwithstanding an alternative statutory remedy, where the order is ex facie vitiated by a natural justice violation.
  • Remand is typically conditioned on a combined pre-deposit (usually around 20% of the disputed demand) to balance revenue interest with the assessee's right to a fair hearing.

Sections Involved

  • Section 73, BGST Act, 2017 — determination of tax not paid/short paid for reasons other than fraud.
  • Section 74, BGST Act, 2017 — determination of tax involving fraud, wilful misstatement or suppression.
  • Rule 142, BGST Rules, 2017 — procedure for issuance of summary of demand in Form GST DRC-07.
  • Article 226, Constitution of India — writ jurisdiction of the High Court.

Decision – In Favour of

Disposed of with directions, substantially in favour of the Assessee — the impugned orders were quashed and the matter remanded for a fresh, reasoned decision on merits, subject to conditional pre-deposit, with the Court expressly reserving its opinion on the merits of the underlying tax demand.

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.: CWJC No.4153 of 2022
  • Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 05.04.2022

Link to Download the Order

Download the full judgment (PDF)

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