Facts of the Case

M/s Singh Enterprises, a proprietorship registered under GSTIN 10ADLPK6747J1ZE, was subjected to an assessment under Section 73 of the Bihar Goods and Services Tax Act, 2017 for the tax period April 2019 to March 2020. The Assistant Commissioner of State Tax, Danapur Circle, passed an order dated 12.02.2021, followed by a summary in Form GST DRC-07 dated 15.02.2021, raising a demand of tax of Rs. 72,46,832/-, interest of Rs. 13,13,396/-, and penalty of Rs. 7,24,682/-. The petitioner's appeal against this order was rejected by the Additional Joint Commissioner of State Tax (Appeal), Patna West Division, by order dated 04.02.2022, allegedly without considering the invoices filed to support an input tax credit claim of Rs. 64,15,206/-. Aggrieved, the petitioner approached the Patna High Court.

Issues Involved

  1. Whether the appellate order rejecting the appeal without examining the invoices supporting the input tax credit claim was sustainable in law.
  2. Whether the original assessment order, passed ex parte, violated the principles of natural justice.
  3. Whether the High Court could interfere despite an alternative statutory remedy where the order was ex facie bad in law.

Petitioner's Arguments

  • The appellate authority passed a cryptic and non-speaking order dated 04.02.2022 without considering the invoices relied upon to substantiate the input tax credit claim of Rs. 64,15,206/-.
  • The original order dated 12.02.2021 and the consequential DRC-07 summary were passed without affording adequate opportunity of hearing.
  • No sufficient time was given to represent the case, resulting in a breach of natural justice with serious civil consequences.
  • Sought quashing of both the appellate order and the underlying assessment order, and a remand for fresh adjudication on merits.

Respondent's Arguments

  • Learned counsel for the Revenue did not oppose remand and stated no objection to the matter being sent back to the Assessing Authority for a fresh decision on merits.
  • Agreed that no coercive steps would be taken against the petitioner during pendency of the proceedings.
  • Undertook to communicate the Court's order to the appropriate authority through electronic mode.

Court Order/Findings

  • The Division Bench held that the Court is not precluded from interfering despite the availability of a statutory remedy where an order is ex facie bad in law.
  • Two reasons were recorded: (a) violation of the principles of natural justice, as insufficient time was afforded to the petitioner; and (b) the ex parte order did not assign sufficient reasons discernible from the record as to how the demand was determined.
  • The impugned appellate order dated 04.02.2022, the assessment order dated 12.02.2021, and the DRC-07 summary dated 15.02.2021 were quashed and set aside.
  • The petitioner was directed to deposit an additional 10% of the demand within eight weeks, over and above the 10% pre-deposit already made for the appeal, without prejudice to the parties' contentions.
  • Bank accounts attached in connection with the proceedings were directed to be de-frozen immediately, and the Assessing Authority was directed to decide the matter afresh on merits within two months of the petitioner's appearance, after passing a reasoned, speaking order.

Important Clarification

  • Availability of an appellate remedy under the GST law does not oust the writ jurisdiction where the impugned order suffers from a facial violation of natural justice.
  • An order that is cryptic, non-speaking, or passed ex parte without disclosing the basis for quantifying a demand is liable to be set aside on this ground alone, without the Court entering into the merits.
  • Remand orders of this nature typically require partial pre-deposit as a condition, are without prejudice to the rights of both sides, and leave all issues open for decision by the Assessing Authority.

Sections Involved

  • Section 73, Bihar Goods and Services Tax Act, 2017 — determination of tax not paid or short paid, or input tax credit wrongly availed, for reasons other than fraud.
  • Section 73(9), Bihar Goods and Services Tax Act, 2017 — computation and demand of tax, interest and penalty following the show cause process.
  • Section 50(3), Bihar Goods and Services Tax Act, 2017 — interest on wrongly availed and utilised input tax credit.

Decision – In Favour of

Disposed of in favour of the Assessee, with the appellate order and the underlying assessment order quashed and the matter remanded for a fresh, reasoned decision on merits, subject to partial pre-deposit conditions.

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.4029 of 2022
  • Case Title: M/s Singh Enterprises vs State of Bihar & Ors.
  • Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 21.03.2022

Link to Download the Order

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