Facts of the Case

M/s Arihant Enterprises, a partnership firm carrying on business at Gulabbagh, Purnea, challenged a chain of GST proceedings for the financial year 2019–20: an assessment order dated 18.1.2021 passed by the Deputy Commissioner of State Taxes, Purnea Circle, the consequential summary in Form GST DRC-07 of the same date, a recovery notice in Form GST DRC-13 dated 26.2.2022, and the appellate order dated 16.12.2021 (with summary in Form GST APL-04 dated 16.7.2021) passed by the Additional Commissioner of State Taxes (Appeals), Purnea, dismissing its statutory appeal. All the orders were passed ex parte. The petitioner approached the Patna High Court under Article 226, contending it was denied a fair opportunity of hearing at every stage.

Issues Involved

  1. Whether ex parte, non-speaking assessment and appellate orders passed without adequate opportunity of hearing violate the principles of natural justice under the Bihar Goods and Services Tax Act, 2017.
  2. Whether the High Court can interfere in writ jurisdiction despite the existence of a statutory appellate remedy, where the order is ex facie bad in law.

Petitioner's Arguments

  • The assessment order, the appellate order, and the consequential demand and recovery summaries were all passed ex parte, without sufficient time or opportunity to represent the case.
  • The orders did not record any discernible reasons, making it impossible to ascertain how the tax liability was determined.
  • Quashing of the entire chain of proceedings — assessment, appeal, and the DRC-07/DRC-13 summaries — was sought, along with a fresh decision on merits.

Respondent's Arguments

  • Counsel for the State had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits.
  • The State undertook that no coercive steps would be taken against the petitioner during pendency of the fresh proceedings.
  • The remand was accepted as a mutually agreeable course, without conceding the merits of the petitioner's case.

Court Order/Findings

  • The Court held that despite the availability of a statutory remedy, it is not precluded from interfering where an order is, ex facie, bad in law.
  • The orders were vitiated for two independent reasons: violation of natural justice through denial of adequate hearing, and being ex parte and non-speaking, without reasons for the tax determined.
  • The authorities had not adjudicated the attending facts and circumstances even though the proceedings were ex parte.
  • All impugned orders — the assessment, the appellate order, and the DRC-07 and DRC-13 summaries — were quashed and set aside.
  • The matter was remanded to the Assessing Authority, conditioned on deposit of 10% of the demand (already made) plus a further 10% within four weeks, with bank accounts to be de-frozen and a fresh, speaking, reasoned order to be passed within two months after a proper hearing.
  • No opinion was expressed on the merits, and the petitioner's right to challenge any fresh order was expressly reserved.

Important Clarification

  • A statutory alternative remedy does not oust writ jurisdiction where the impugned order is ex facie bad in law — particularly where it is ex parte and unreasoned.
  • An order determining tax liability without discernible reasons, even if passed ex parte for want of a reply, offends natural justice and entails civil consequences; adjudicating authorities must deal with all facts and issues even in ex parte proceedings.
  • Conditional remand with partial pre-deposit is a recognised middle path between outright quashing and dismissal on the alternate-remedy ground.

Sections Involved

  • Section 73, Bihar Goods and Services Tax Act, 2017 — determination of tax not involving fraud or wilful misstatement.
  • Section 107, Bihar Goods and Services Tax Act, 2017 — appeal to the Appellate Authority.
  • Form GST DRC-07 and DRC-13, BGST Rules, 2017 — summary of demand and recovery notice.
  • Article 226, Constitution of India — writ jurisdiction invoked despite alternate remedy.

Decision – In Favour of

In favour of the Assessee — all impugned orders were quashed and remanded for a fresh, reasoned decision after due hearing, subject to a partial pre-deposit condition; no finding was recorded 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: High Court of Judicature at Patna
Case No.: CWJC No. 4303 of 2022
Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
Date of Order: 24 March 2022
CNR: Not available in the extracted record.

Link to Download the Order

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