Facts of the Case

HAV Automobiles Pvt. Ltd., a company registered under GSTIN 10AACCH5613D1ZD and carrying on business at Patna, was assessed under Section 73 of the Bihar Goods and Services Tax Act, 2017 ("BGST Act") for the tax period April 2018 to March 2019. The Deputy Commissioner of State Taxes, Patna Central Circle, passed an ex-parte order dated 08.08.2019, followed by a summary of order in Form GST DRC-07 dated 14.08.2019 (Reference No. ZA100819000646P). The petitioner's appeal against this order under Section 107 of the BGST/CGST Act, 2017 was rejected by the Additional Commissioner of State Taxes (Appeals), Patna West, vide order dated 13.01.2021 (Memo No. 46), also passed ex-parte. Aggrieved, the petitioner approached the Patna High Court under Article 226 seeking quashing of both orders and protection against coercive recovery.

Issues Involved

  1. Whether the ex-parte appellate order dated 13.01.2021, passed without hearing the petitioner, violated the principles of natural justice.
  2. Whether the underlying assessment order dated 08.08.2019 under Section 73, which did not disclose reasons for the tax determined, could be sustained.
  3. Whether the writ court could interfere despite the availability of an alternate statutory remedy.

Petitioner's Arguments

  • The appellate order was passed ex-parte, without affording sufficient time or opportunity to represent the case.
  • The original assessment order under Section 73 did not assign any discernible reasons for the tax, interest and penalty determined.
  • Coercive recovery and bank attachment ought to be restrained pending disposal.

Respondent's Arguments

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

Court Order/Findings

  • The Court held that an ex-parte order that does not disclose reasons, and is passed without affording sufficient opportunity of hearing, is bad in law despite the existence of an alternate statutory remedy.
  • Both the appellate order dated 13.01.2021 and the assessment order dated 08.08.2019 along with the DRC-07 summary were quashed and set aside.
  • The matter was remanded to the Assessing Authority, subject to the petitioner depositing an additional 10% of the demand within four weeks (over and above the 10% already deposited for the appeal), with bank attachments to be released immediately.
  • The Assessing Authority was directed to pass a fresh, reasoned, speaking order within two months of the petitioner's appearance, after affording full opportunity of hearing.
  • No opinion was expressed on the merits of the tax liability; all issues were left open, with liberty reserved to challenge the fresh order.

Important Clarification

  • An assessment or appellate order that is ex-parte in nature and does not assign sufficient reasons decipherable from the record is liable to be set aside on the short ground of violation of natural justice, independent of the merits of the tax demand.
  • Courts routinely condition such remands on part-deposit of the disputed demand, balancing the assessee's right to a fair hearing against the Revenue's interest in protecting the demand.

Sections Involved

  • Section 73, BGST/CGST Act, 2017 — determination of tax not paid or short paid for reasons other than fraud.
  • Section 107, BGST/CGST Act, 2017 — appeal to the Appellate Authority against orders of the proper officer.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee on the natural justice ground — both the assessment and appellate orders were quashed and the matter remanded for a fresh, reasoned decision on merits, subject to conditional 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: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No.4171 of 2022
  • Parties: HAV Automobiles Pvt. Ltd. vs State of Bihar & Ors.
  • Coram: The Chief Justice (Sanjay Karol, CJ) and Justice S. Kumar
  • Date of Order: 22.03.2022

Link to Download the Order

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