Facts of the Case

Shri Sai Chandra Infrawell Pvt. Ltd. challenged an appellate order dated 10.08.2021 passed by the Additional Commissioner of State Taxes (Appeals), West Division, Patna, in Appeal Case No. GST/PTC-73/2020-22, which rejected its appeal against an original order dated 05.03.2020 passed by the Joint Commissioner of State Taxes, Central Circle, Patna, along with the summary of order in Form GST DRC-07. Both the original demand order and the appellate order rejecting the appeal were passed ex parte, without the petitioner being afforded adequate opportunity of hearing.

Issues Involved

  1. Whether an ex parte GST demand order passed under Section 73 without recorded reasons or opportunity of hearing is sustainable, notwithstanding the availability of statutory appellate remedy.
  2. Whether the High Court can interfere in writ jurisdiction where an order is ex facie bad in law for violating natural justice, despite an alternate remedy.
  3. The terms on which the matter should be remanded for fresh adjudication.

Petitioner's Arguments

  • The original order dated 05.03.2020 and the appellate order dated 10.08.2021 rejecting the appeal were both passed ex parte, without adequate opportunity of hearing.
  • Neither order recorded reasons sufficient to show how the tax officer arrived at the amount determined as due and payable.
  • Sought quashing of both orders and a fresh, reasoned adjudication after proper hearing.

Respondent's Arguments

  • 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.
  • Undertook that no coercive steps would be taken against the petitioner during pendency of the remanded proceedings.

Court Order / Findings

  • Held that the High Court is not precluded from interfering in writ jurisdiction, notwithstanding the statutory remedy, where an order is ex facie bad in law.
  • Found the impugned orders vitiated for violating natural justice — insufficient opportunity of hearing — and for being ex parte orders that recorded no discernible reasons for the tax liability determined; the authorities had also not adjudicated on the attending facts and circumstances.
  • Quashed and set aside the appellate order, the original order, the Form GST DRC-07 summary, and the Form GST APL-04 demand summary dated 12.08.2021.
  • Remanded the matter to the Assessing Authority for a fresh, reasoned decision, conditioned on the petitioner's 10% pre-deposit already made plus an additional 10% of the demand within four weeks, without prejudice to the parties' rights, and refundable if found excess.
  • Directed de-freezing of the petitioner's bank accounts, restrained coercive steps pending fresh adjudication, and directed a fresh speaking order within two months, with liberty to challenge and all issues on merits left open.

Important Clarification

  • Even where a statutory appellate remedy under Section 107 exists, the High Court will exercise writ jurisdiction to quash a GST demand order that is ex facie bad in law — particularly one passed ex parte without recording reasons for the tax liability computed.
  • An ex parte order does not satisfy natural justice merely because the assessee did not appear; the adjudicating authority must still address the issues of fact and law arising from the material on record.
  • Remand on this ground is commonly conditioned on part pre-deposit (here 10% already paid plus a further 10% within four weeks) and time-bound directions for a fresh speaking order, without any opinion expressed on the merits of the tax demand itself.

Sections Involved

  • Section 73, Bihar GST Act, 2017 — determination of tax not paid/short paid or ITC wrongly availed (non-fraud cases).
  • Section 107, Bihar GST Act, 2017 — appeal to the appellate authority.
  • Rule 142(5), CGST/BGST Rules, 2017 — summary of order in Form GST DRC-07.

Decision – In Favour of

Disposed of with directions, in part in favour of the Assessee — both the original and appellate orders were quashed for violating natural justice and the matter remanded for fresh, reasoned adjudication, with no finding on the merits of the underlying tax demand.

Related Case Laws

  • Frontline (NCR) Business Solutions Pvt. Ltd. v. Union of India, CWJC No. 3605 of 2022 (Patna High Court) — same principle applied to an ex parte GST demand and appellate rejection.

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No. 3681 of 2022
  • Coram: Hon'ble the Chief Justice Sanjay Karol and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 07.03.2022

Link to Download the Order

https://mytaxexpert.co.in/uploads/1787073924_4582compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.