Binay Rice Mill Trade Vs State of Bihar (Patna High Court)
Conclusion: Quasi-judicial authorities were obliged to render reasoned and speaking orders, and that reasons should have been assigned by the adjudicating authority to the extent whether the circulars adduced by assessee were applicable to their case or not. Accordingly, the High Court held that the orders of both the adjudicating authority and the appellate authority were unsustainable, proceeding to quash the impugned orders while remanding the matter back to the adjudicating authority.
Held: Assessee was an entity trading in the name of Sharda Ram Industries, represented through its proprietor Binay Kumar Singh had challenged the rejection of its refund application for tax paid on procurement of capital goods under the Export Promotion Capital Goods (EPCG) Scheme. Assessee imported capital goods and filed an application seeking refund of the tax paid on such capital goods under the EPCG Scheme in terms of Section 54(1) of the GST Act and applicable rules and circulars. The refund application applied for by assessee was first rejected on the the ground that assessee had not complied with the show cause notice. However, such an order had been passed by the adjudicating authority without adequately dealing with the detailed reply filed by assessee. Assessee submitted that the adjudicating authority had failed to pass a reasoned and speaking order and failed to take into account the reply filed by assessee, including their reliance on several circulars issued by the Central Board of Indirect Taxes and Customs. Respondent state and GST authorities stated that they were not in a position to apprise the Court whether the order of the adjudicating authority was in consonance with the show cause notice and the reasons assigned, and whether it had considered the reply filed by assessee. However, Respondent sought to sustain the action of Adjudicating Authority order in the guise of decision of the appellate authority. It was held that Adjudicating Authority was bound to take into account the reply and supporting documents placed before it and to provide clear reasons as to why such submissions made by assessee before it were accepted or rejected. The Court noted that the order was bereft of consideration of the reply issued by assessee and thus suffered from violation of principles of natural justice. The Court referred to the Supreme Court decision in Oryx Fisheries Pvt. Ltd. v. Union of India (2010) where it was held that “Insistence on reason was a requirement for both judicial accountability and transparency”. The Patna High Court reiterated that quasi-judicial authorities were obliged to render reasoned and speaking orders, and that reasons should have been assigned by the adjudicating authority to the extent whether the circulars adduced by assessee were applicable to their case or not. Accordingly, the High Court held that the orders of both the adjudicating authority and the appellate authority were unsustainable, proceeding to quash the impugned orders while remanding the matter back to the adjudicating authority.
