Facts of the Case

The petitioner, Mithilesh Kumar Gupta, proprietor of M/s Mahabir Drugs, Sakri, Bihar, was subjected to an ex parte order dated 08.03.2020 passed by the Assistant Commissioner of State Taxes, Darbhanga (Reference No. ZA100320012303S). The petitioner's appeal against this order was rejected by the Additional Commissioner of State Taxes (Appeals), Darbhanga Division, vide order dated 08.01.2022 (Appeal No. AD100321003943U) and summary order in Form GST APL-04 dated 10.01.2022, and this appellate order too was passed ex parte. Aggrieved by both orders, the petitioner approached the Patna High Court in writ jurisdiction.

Issues Involved

  1. Whether ex parte orders passed at both the original and appellate stages, without adjudicating the facts and circumstances of the case, can be sustained.
  2. Whether the High Court can interfere in writ notwithstanding the statutory appellate remedy already availed.

Petitioner's Arguments

  • No sufficient opportunity of hearing was afforded either at the original assessment stage or before the Appellate Authority.
  • Both orders were unreasoned and ex parte, with the appellate authority also failing to adjudicate on the facts and circumstances of the case.

Respondent's Arguments

  • Learned counsel for the Revenue had no objection to remand of the matter 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 Court held that both the original and appellate orders, being ex parte, unreasoned, and passed without adjudicating the attending facts and circumstances, violated natural justice and entailed civil consequences.
  • All issues of fact and law ought to have been dealt with by the authorities even in ex parte proceedings.
  • The appellate order dated 08.01.2022, the original order dated 08.03.2020, and the Form GST APL-04 summary dated 10.01.2022 were quashed and set aside.
  • The Court accepted the petitioner's statement that 10% of the demand (the appeal pre-deposit) already stood paid, and directed an additional 10% deposit within four weeks, without prejudice to the parties' rights and refundable if found in excess.
  • Attached bank accounts were directed to be de-frozen immediately, and the Assessing Authority was directed to pass a fresh, reasoned, speaking order after affording a proper opportunity of hearing, preferably within two months of the petitioner's appearance.
  • No opinion was expressed on the merits; all issues were left open.

Important Clarification

  • Ex parte assessment and appellate orders that fail to adjudicate the facts and circumstances placed on record entail civil consequences and are liable to be quashed for violation of natural justice, even where a statutory appeal has already been availed and decided.
  • The Patna High Court's standard remand condition in such matters requires a combined 20% deposit of the disputed demand (10% already paid towards the appeal, plus an additional 10%) before fresh adjudication proceeds.

Sections Involved

  • Bihar Goods and Services Tax Act, 2017 — governs assessment and appellate proceedings against which the impugned orders were passed.
  • Form GST APL-04 — the summary of the order passed by the Appellate Authority under the GST appeal mechanism.

Decision – In Favour of

Disposed of with directions — both orders were quashed on natural-justice grounds and the matter remanded for fresh adjudication on a combined 20% pre-deposit. No opinion was expressed on the merits of the tax demand, making this a procedural win for the Assessee.

Related Case Laws

  • M/s Aishra Technofab Engineers vs Union of India, CWJC No. 3212 of 2022, Patna High Court — same-day order quashing an unreasoned Section 73(9) BGST demand order.
  • 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. 3663 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/1787074460_4594compressed.pdf

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