Facts of the Case: The petitioner, M/s Frontline (NCR) Business Solutions Private Limited, Patna, was assessed for the tax period August 2019 through a best-judgment assessment order dated 09.10.2019 under Section 62 of the CGST Act, 2017, passed ex parte by the Joint Commissioner of State Tax, Gandhi Maidan, Patna. A consequent demand of Rs. 28,34,286 (CGST and SGST of Rs.13,96,200 each, plus interest) was raised via summary order in Form GST DRC-07 dated 18.10.2019. The petitioner's statutory appeal against these orders was rejected by the Additional Commissioner of State Tax (Appeals), West Division, Patna, by order dated 05.03.2020, solely on the ground of limitation. Coercive recovery was also initiated against the petitioner in Form GST DRC-13 directed to the Bihar State Road Transport Corporation. Aggrieved by the ex parte assessment, the demand, and the limitation-based rejection of its appeal, the petitioner filed this writ petition seeking to quash all three orders and for other consequential reliefs, including refund of the 10% pre-deposit made for the appeal.

Issues Involved

  1. Whether the ex parte best-judgment assessment order and the consequent DRC-07 demand, passed without adequate opportunity of hearing and without assigning reasons, could be sustained.
  2. Whether the writ court, despite the availability of a statutory remedy, could interfere with an order that was ex facie bad in law for violation of natural justice.

Petitioner's Arguments

  • The best-judgment assessment order under Section 62 and the DRC-07 demand were passed ex parte, without affording sufficient opportunity of hearing.
  • The appellate authority had mechanically rejected the appeal on limitation without examining the merits of the underlying assessment.
  • Since the petitioner had already paid CGST and SGST along with late fee for the relevant period, no further recovery under the impugned DRC-07 order was justified, and the pre-deposit of Rs.2,79,240 made for the appeal ought to be refunded.

Respondent's Arguments

  • The Revenue's counsel stated no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits, with limitation not being permitted to come in the way, and agreed that no coercive steps would be taken during the pendency of the case.

Court Order / Findings

  • The Court held that despite the availability of a statutory remedy, it was not precluded from interfering where the order was, ex facie, bad in law — here, on account of (a) violation of natural justice, with no sufficient opportunity of hearing afforded; and (b) an ex parte order that did not assign reasons decipherable from the record for the amount determined.
  • It further found that the authorities had not adjudicated the matter on the attending facts and circumstances, even though the proceedings were ex parte in nature.
  • On this short ground, the appellate order dated 05.03.2020, the assessment order dated 09.10.2019, and the DRC-07 summary demand dated 18.10.2019 were quashed and set aside, and the matter remanded to the Assessing Authority for a fresh, reasoned decision on merits, with detailed timelines and safeguards — including de-freezing of attached bank accounts, an additional 10% deposit of the demand, no coercive action pending fresh adjudication, and a speaking order to be passed within two months.
  • The Court expressly clarified it had not expressed any opinion on the merits, and all issues were left open, with liberty reserved to challenge the fresh order.

Important Clarification

  • A writ court is not precluded by the existence of a statutory appellate remedy from quashing an ex parte assessment order where it is bad in law on its face — for want of adequate hearing or for failing to record reasons for the demand determined.
  • An appellate rejection confined to limitation, without addressing the underlying merits or natural-justice infirmities in the original order, does not cure those infirmities.

Sections Involved

  • Section 62, CGST Act, 2017 — best-judgment assessment of non-filers of returns.
  • Section 107, CGST Act, 2017 — statutory appeal and pre-deposit requirements.
  • Rule 142, CGST Rules, 2017 — summary of demand orders in Form GST DRC-07 and recovery in Form GST DRC-13.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee on the procedural challenge. The ex parte assessment, demand and appellate rejection were quashed and the matter remanded for fresh adjudication on merits; the Court expressed no opinion on the substantive tax liability.

Related Case Laws

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No.3381 of 2022
  • CNR: Not indicated on the order
  • Coram: Hon'ble the Chief Justice Sanjay Karol and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 28.02.2022

Link to Download the Order

https://mytaxexpert.co.in/uploads/1787077140_4642compressed.pdf

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