Facts of the Case

M/s Sri Krishna Sales Agency, Patna, challenged an appellate order dated 17.03.2022 passed by the Additional Commissioner of State Tax (Appeal), Patna West Division, which dismissed its appeal under Section 107 of the Bihar Goods and Services Tax Act, 2017 (BGST Act) as barred by limitation. The underlying assessment order dated 08.08.2019, passed under Section 73 of the BGST Act by the Deputy Commissioner of State Tax, Patna Central Division, had assessed the petitioner ex parte, allegedly in violation of natural justice. The petitioner also sought a direction restraining recovery from its HDFC Bank account, which had been frozen pursuant to the assessment order.

Issues Involved

  1. Whether the appellate authority was right in dismissing the Section 107 appeal solely on the ground of delay, without examining the natural-justice defect in the underlying ex parte assessment.
  2. Whether the ex parte assessment order under Section 73 of the BGST Act, passed without adequate opportunity of hearing and without recording sufficient reasons, could be sustained.

Petitioner's Arguments

  • The appellate order rejecting the appeal on limitation should be quashed, along with the underlying ex parte assessment order, which was passed in violation of the principles of natural justice.
  • Sought a direction restraining recovery from the frozen HDFC Bank account pursuant to the assessment order.

Respondent's Arguments

  • Counsel for the Revenue stated there was no objection to remanding the matter to the Assessing Authority for a fresh decision on merits, agreeing that limitation would not come in the way of the fresh proceedings, and that no coercive steps would be taken against the petitioner 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 an order is ex facie bad in law — here, for violation of natural justice (no sufficient opportunity of hearing) and for an ex parte order lacking discernible reasons for the amount determined.
  • Both the appellate order dated 17.03.2022 and the assessment order dated 08.08.2019 were quashed and set aside.
  • On consent terms: the petitioner's undertaking that 10% of the disputed demand (the statutory pre-deposit for the appeal) already stood deposited was accepted, and the petitioner further undertook to deposit an additional 10% of the demand within four weeks — effectively a 20% pre-deposit — without prejudice to the parties' rights, refundable if found in excess.
  • The Assessing Authority was directed to de-freeze/de-attach the petitioner's bank account(s) immediately, and to decide the matter afresh on merits after affording a full opportunity of hearing, within two months of the petitioner's appearance, passing a reasoned, speaking order; all issues of fact and law were left open for both sides, with liberty reserved to challenge the fresh order.

Important Clarification

This order does not decide the petitioner's actual GST liability — it only sets aside an assessment tainted by lack of a fair hearing and an appeal wrongly dismissed on limitation without examining that defect, sending the matter back for a proper hearing on a 20% pre-deposit. It is a useful illustration of how courts will step in despite an available statutory remedy where the assessment itself is ex facie flawed on natural-justice grounds.

Sections Involved

  • Bihar Goods and Services Tax Act, 2017 — Section 73 (assessment in non-fraud cases) and Section 107 read with Rule 108(3) of the BGST Rules (appeal to Appellate Authority).

Decision – In Favour of

Decided in favour of the petitioner on the natural-justice point; both the assessment and appellate orders were quashed and the matter remanded for a fresh decision on merits, conditional on a 20% pre-deposit.

Case Details

Court: High Court of Judicature at Patna
Case No.: Civil Writ Jurisdiction Case No. 9969 of 2022
Coram: Hon'ble The Chief Justice Sanjay Karol and Hon'ble Mr. Justice S. Kumar
Date of Judgment: 27.07.2022

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