Facts of the Case

The petitioner, M/s Ankit Paper Mart, a proprietorship firm at Khazanchi Road, Patna, through its proprietor Pradeep Kumar Sultania, was assessed by the Assistant Commissioner State Tax, Patna North Circle, under Section 73 of the CGST/BGST Act, 2017 vide order dated 16.03.2020, along with a summary of order in Form GST/DRC-07 for the tax period 2019-20. The petitioner's appeal filed under Section 107 of the Act, registered as GST/PTN-01/20-21, was rejected by the Additional Commissioner of State Taxes (Appeals), East Division, Patna, vide order dated 29.01.2022, which affirmed the Assessing Authority's order in its entirety. Aggrieved, the petitioner approached the Patna High Court in CWJC No.4459 of 2022 seeking quashing of both the appellate and original orders, and a restraint on coercive recovery of tax and penalty.

Issues Involved

  1. Whether the appellate order affirming the Section 73 assessment was sustainable despite failing to consider the contentions raised by the petitioner.
  2. Whether the original assessment order dated 16.03.2020 was vitiated for non-disclosure of reasons and denial of adequate hearing.

Petitioner's Arguments

  • The Assessing Authority's order dated 16.03.2020 did not assign sufficient reasons for determining the tax, interest and penalty payable.
  • The Appellate Authority mechanically affirmed the assessment order in Appeal No. GST/PTN-01/20-21 without considering the contentions raised in the appeal.
  • Coercive recovery of tax and penalty pursuant to the impugned orders ought to be restrained during pendency of the writ petition.

Respondent's Arguments

  • Learned counsel for the Revenue did not object to a remand 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 case.

Court Order/Findings

  • The Division Bench reiterated that the writ court, notwithstanding the availability of a statutory remedy, is not precluded from interfering where an order is ex facie bad in law.
  • The orders were found vitiated for (a) violation of natural justice — the contentions raised were not considered by either the Assessing or the Appellate Authority — and (b) failure to disclose reasons decipherable from the record as to how the tax liability was determined, entailing civil consequences.
  • The Court also found that the authorities had failed to adjudicate the matter on the attending facts and circumstances, even though the proceedings were of an ex parte nature.
  • Both the appellate order dated 29.01.2022 and the original order dated 16.03.2020, along with the Form GST/DRC-07 summary, were quashed and set aside.
  • The matter was remanded on a combined 20% pre-deposit condition, with bank accounts directed to be de-frozen immediately and no coercive steps during the fresh proceedings.

Important Clarification

  • An appellate order that merely affirms an assessing officer's order without independently addressing the grounds of appeal amounts to non-application of mind and violates natural justice, warranting interference in writ jurisdiction.
  • The obligation to record reasons applies at both the assessment and appellate stages under Section 73; failure at either stage renders the order liable to be quashed.

Sections Involved

  • Section 73, CGST/BGST Act, 2017 — determination of tax not paid/short paid for reasons other than fraud.
  • Section 107, CGST/BGST Act, 2017 — appeal to Appellate Authority against the assessment order.
  • Article 226, Constitution of India — writ jurisdiction invoked despite availability of the statutory appellate 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 on merits, subject to conditional pre-deposit, with no opinion expressed on the merits of the 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.4459 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

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