Facts of the Case

The petitioner, Sanrachna Homes Private Limited, having its registered office at Boring Road, Patna, through its Director Manoj Kumar Singh, was assessed by the Assistant Commissioner of State Tax, Patna Special Circle, under Section 73 of the BGST/CGST Act, 2017 vide order dated 07.03.2020 (reference no. ZA1003200104502), directing deposit of Rs.17,22,582/- towards tax, interest and penalty for the tax period corresponding to Financial Year 2018-19. The petitioner's appeal against this order, registered as Appeal Case No. AD100620000842X (GSTIN 10AAWCS9841A1ZA), was rejected by the Additional Commissioner (Appeal), Central Division, Patna, vide order dated 01.04.2021, with a corresponding summary of demand issued in Form GST APL-04 (reference no. ZD1004210001800). Aggrieved, the petitioner moved the Patna High Court in CWJC No.3783 of 2022 seeking quashing of both orders and a restraint on coercive recovery.

Issues Involved

  1. Whether the appellate order upholding the Section 73 demand was sustainable when passed in a cryptic, misconceived and non-speaking manner.
  2. Whether the original assessment order dated 07.03.2020 was vitiated for want of adequate opportunity of hearing and reasoned determination.

Petitioner's Arguments

  • The appellate order dated 01.04.2021 rejecting the appeal and upholding the demand of Rs.17,22,582/- was cryptic and non-speaking, without engaging with the grounds raised.
  • The original demand order dated 07.03.2020 was passed without affording the petitioner a fair opportunity to be heard.
  • Coercive action pursuant to the impugned orders, including under reference no. ZD1004210001800, ought to be restrained pending adjudication.

Respondent's Arguments

  • Learned counsel for the Revenue did not object 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 pendency of the fresh proceedings.

Court Order/Findings

  • The Division Bench held that the writ court is not precluded from interfering, notwithstanding the statutory appellate remedy, where an order is ex facie bad in law.
  • The orders were found vitiated for (a) violation of natural justice due to insufficient opportunity of hearing, and (b) being passed in a manner that did not disclose sufficient reasons for the determination of the amount due, entailing civil consequences.
  • The Court quashed and set aside both the appellate order dated 01.04.2021 and the original order dated 07.03.2020, along with the summary of demand in Form GST APL-04.
  • The matter was remanded on a combined 20% pre-deposit of the demand (10% already stated as deposited for the appeal, plus an additional 10% within four weeks), with bank accounts to be de-frozen immediately and no coercive recovery meanwhile.

Important Clarification

  • A Section 73 assessment order and its confirming appellate order are both liable to be set aside where neither discloses the reasoning behind the tax computation and adequate hearing was not afforded — this remains true even where the appellate order does not rest on a limitation bar but simply affirms the assessment without independent reasoning.
  • Remand on conditional pre-deposit is the standard relief where natural justice is breached, without any finding being expressed on the merits of the tax liability itself.

Sections Involved

  • Section 73, BGST/CGST Act, 2017 — determination of tax not paid/short paid for reasons other than fraud.
  • Section 107, BGST/CGST Act, 2017 — appeal to Appellate Authority.
  • Article 226, Constitution of India — writ jurisdiction invoked despite availability of statutory remedy.

Decision – In Favour of

Disposed of with directions, substantially in favour of the Assessee — both the assessment and appellate orders were quashed and the matter remanded for a fresh, reasoned decision, subject to conditional pre-deposit, with no opinion expressed on the merits of the 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.3783 of 2022
  • Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 01.04.2022

Link to Download the Order

Download the full judgment (PDF)

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