Facts of the Case

M/s Ajay Kumar Singh, a proprietorship firm through its proprietor, filed a writ petition before the High Court of Judicature at Patna challenging the order dated 18.12.2021 passed by the Additional Commissioner of State Tax (Appeal), Sahabad Circle (Patna West), in Appeal Case No. GST/SH-55 of 2020-21, issued in Form GST APL-04, which rejected the petitioner's appeal against the original order dated 17.01.2021 passed by the Joint Commissioner of State Tax, Sahabad, and the corresponding Summary of Order in Form GST DRC-07 dated 17.01.2021. Learned counsel for the Revenue submitted before the Court that he had no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, and that no coercive steps would be taken meanwhile.

Issues Involved

  1. Whether the original assessment order and the ex parte appellate order violated principles of natural justice for want of sufficient hearing opportunity.
  2. Whether an order that did not assign decipherable reasons for the tax demand was liable to be quashed notwithstanding the availability of the statutory remedy.

Petitioner's Arguments

  • No sufficient time was afforded to represent the case, amounting to violation of the principles of natural justice.
  • The original order was ex parte in nature and did not assign any reasons — even decipherable from the record — as to how the officer arrived at the amount due and payable.
  • Ten per cent of the total demand, a pre-condition for hearing of the appeal, already stood deposited.

Respondent's Arguments

  • The Revenue's counsel stated no objection to the matter being remanded to the Assessing Authority for fresh decision on merits, with no coercive steps to be taken during pendency.

Court Order / Findings

  • Notwithstanding the availability of the statutory remedy, the Court held it was not precluded from interfering where the order was ex facie bad in law — here, for violation of natural justice and because the order, being ex parte, did not assign reasons sufficient or decipherable from the record for the amount determined.
  • The impugned orders dated 18.12.2021 (appellate), 17.01.2021 (original, and the DRC-07 summary), and a further order dated 25.02.2022, were all quashed and set aside.
  • The petitioner was directed to additionally deposit ten per cent of the demand within four weeks, without prejudice to the parties' rights; bank accounts attached in the proceedings were directed to be de-frozen immediately.
  • The Assessing Authority was directed to decide the matter afresh on merits, after complying with natural justice, preferably within two months of the petitioner's appearance on 21.03.2022, and to pass a speaking order assigning reasons; liberty was reserved to the petitioner to challenge the fresh order and to pursue other remedies.

Important Clarification

  • An ex parte assessment or appellate order that does not record reasons or engage with the assessee's case, and is passed without adequate opportunity of hearing, is liable to be quashed by a writ court notwithstanding the availability of the statutory appellate remedy, where the vice goes to the root — a total absence of reasoning reflected in the order.

Sections Involved

  • Section 107 of the CGST/BGST Act, 2017 — appeal to the Appellate Authority against orders of the proper officer.
  • Form GST DRC-07 and Form GST APL-04 under the CGST Rules, 2017 — summary of demand order and appellate order respectively.

Decision – In Favour of

In favour of the Assessee — the ex parte assessment and appellate orders were quashed and the matter remitted for a fresh, reasoned adjudication, subject to an additional 10% deposit of the demand.

Related Case Laws

  • S.K. Enterprises vs State of Bihar, Civil Writ Jurisdiction Case No. 3774 of 2022, Patna High Court — a companion ruling quashing a non-speaking GST cancellation order for violation of natural justice.

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No. 3878 of 2022
  • Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 09.03.2022

Link to Download the Order

You can view/download the order here.

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