Facts of the Case

The petitioner, M/s Aishra Technofab Engineers, a partnership firm with its principal office at Patliputra Industrial Area, Patna, registered under GSTIN 10ABMFA5949H1ZF, challenged an order dated 18.02.2021 passed by the Assistant Commissioner of State Tax, Patna Central under Section 73(9) of the Bihar Goods and Services Tax Act, 2017. Pursuant to this order, a summary of demand in Form GST DRC-07 dated 22.02.2021 (Reference No. ZD100221012190N) was issued, raising a tax demand of Rs.21,85,202/- for the tax period April 2019 to March 2020. Aggrieved, the petitioner approached the Patna High Court under its writ jurisdiction.

Issues Involved

  1. Whether the High Court can interfere in writ jurisdiction, notwithstanding the availability of a statutory appellate remedy, where the impugned order is ex facie unreasoned and passed in violation of natural justice.
  2. Whether the Section 73(9) order, being cryptic and lacking reasons for the quantum determined, could be sustained.

Petitioner's Arguments

  • No sufficient time was afforded to the petitioner to represent its case before the order was passed, violating the principle of a fair hearing.
  • The order was unreasoned and cryptic, assigning no discernible basis for how the demand of Rs.21,85,202/- was arrived at.

Respondent's Arguments

  • Learned counsel for the Revenue stated no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits.
  • The Revenue undertook that no coercive steps would be taken against the petitioner during the pendency of fresh proceedings.

Court Order / Findings

  • The Division Bench held that the Court is not precluded from interfering in writ, despite the statutory remedy, where an order is ex facie bad in law.
  • The order was found to violate natural justice (insufficient opportunity of hearing) and to be unreasoned and cryptic, entailing civil consequences.
  • The impugned order dated 18.02.2021 and the DRC-07 summary dated 22.02.2021 were quashed and set aside.
  • The petitioner was directed to deposit 20% of the demand within four weeks, without prejudice to the parties' contentions, refundable within two months if found in excess.
  • Bank accounts attached in connection with the proceedings were directed to be de-frozen immediately.
  • The Assessing Authority was directed to pass a fresh, reasoned, speaking order on merits after affording adequate opportunity of hearing, preferably within two months of the petitioner's appearance.
  • All contentions and issues were left open; no opinion was expressed on merits.

Important Clarification

  • An unreasoned and cryptic assessment order that does not disclose how the tax liability was computed, and which is passed without adequate opportunity of hearing, is liable to be quashed in writ despite an available statutory appeal.
  • The Patna High Court's standard remand formula in such cases conditions the fresh adjudication on the assessee depositing 20% of the disputed demand, coupled with de-freezing of attached bank accounts and a time-bound, reasoned re-determination.

Sections Involved

  • Section 73(9), Bihar Goods and Services Tax Act, 2017 — empowers the proper officer to determine tax not paid or short paid (for reasons other than fraud) and pass an order along with interest and penalty.
  • Form GST DRC-07 — the summary of the order raising the demand, issued electronically upon determination under Section 73/74.

Decision – In Favour of

Disposed of with directions — the demand order was quashed on natural-justice grounds and the matter remanded for fresh adjudication, subject to a 20% pre-deposit. No opinion was expressed on the merits of the tax demand, making this a procedural win for the Assessee rather than a final determination in its favour.

Related Case Laws

  • Mithilesh Kumar Gupta (M/s Mahabir Drugs) vs State of Bihar, CWJC No. 3663 of 2022, Patna High Court — same-day order quashing an ex parte BGST order for want of natural justice.
  • M/s Frontline (NCR) Business Solutions Pvt Ltd vs State of Bihar, CWJC No. 3570 of 2022, Patna High Court — appellate GST order quashed for not considering material on record.

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No. 3212 of 2022
  • Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 07.03.2022

Link to Download the Order

https://mytaxexpert.co.in/uploads/1787074183_4589compressed.pdf

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