Quashed summary revised GST demand cannot be made without giving the assessee a reasonable opportunity to be heard
Patna High Court has held that a demand made under GST laws on the basis of orders passed where the assessee was not given a reasonable opportunity to be heard is not maintainable as it violates the principles of natural justice.
M/s Manoj Kumar (“the Petitioner”) had filed an appeal before the Additional Commissioner of State Taxes (Appeal), Purnea Division, Purnea (“Respondent 2”) against the order of the Assistant Commissioner of State Taxes, Saharsa Circle, Saharsa (“Respondent 3”) dated February 9, 2021. The said appeal was dismissed via the order by Respondent 2 on April 9, 2021.
Subsequently, a summary revised GST demand was made to the Petitioner.
The Petitioner preferred the present Writ Petition against this demand by stating that the impugned orders passed by Respondent 3 and subsequently Respondent 2 indicate that no fair opportunity of hearing was afforded to the Petitioner which make the impugned orders liable to be set aside on the ground of violation of principles of natural justice.
The Hon’ble Patna High Court, Writ Petition No.17524 of 2021 decided on October 6, 2021 held as under:
FULL TEXT OF THE PATNA HIGH COURT JUDGMENT
Petitioner has prayed for the following relief:-
(a) For issuance of a writ in the nature of certiorari for quashing of the communication in form GST APL-04 dated 09.04.202 1 issued by the respondent number 2 whereby the appeal preferred by the petitioner against the order dated 09.02.202 1 passed by the respondent No. 3 under section 74 of the Bihar Goods and Services Tax Act, 2017 (hereinafter referred to as the Bihar act 2017 for short) has been rejected and a summary revised demand has been forwarded to the petitioner;
(b) For issuance of a writ in the nature of certiorari for quashing of the order dated 09.02.202 1 passed and issued by the Respondent No. 3 whereby liability of tax, interest and penalty has been imposed in a proceeding under Section 74 of the Bihar Act 2017;
(c) For further restraining the respondents from making recovery of the amount of tax, interest and penalty imposed and raised in terms of the impugned order dated 09.02.202 1 passed by the respondent number 3;
(d) For holding and declaration that the impugned order dated 09.04.202 1 passed by the respondent number 2 as first appellate authority is highly cryptic, nonspeaking and in teeth of section 107 of the Bihar Act, 2017;
(e) For further holding and a declaration that the silence maintained by the respondent No. 3 upon the application seeking rectification of the order dated 02.202 1 filed by the petitioner under section 161 of the Bihar Act 2017 is further unreasonable, arbitrary and abdication of the duty conferred upon the respondent no. 3 in terms of the said provisions of the Bihar Act, 2017;
e) For grant of any other relief or reliefs to which the petitioner is found entitled in the facts and circumstances of this case;
It is brought to our notice that vide impugned order dated 09.04.202 1 passed by the Respondent No. 2 namely Additional Commissioner of State Taxs (Appeal), Purnea Division, Purnea in Form GST APL-04 , the appeal of the petitioner against the order dated 09.02.202 1 passed by the Respondent No. 3 namely Assistant Commissioner of State Taxes, Saharsa Circle, Saharsa in GSTIN-10APTPK2319A1ZG has been rejected. The orders appeared to be ex parte in nature.
Learned counsel for the Revenue, states that he has no objection if the matter is remanded to the Assessing Authority for deciding the case afresh. Also, the case shall be decided on merits. Also, during pendency of the case, no coercive steps shall be taken against the petitioner.
Statement accepted and taken on record.
However, having heard learned counsel for the parties as also perused the record made available, we are of the considered view that this Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. As such, on this short ground alone, we dispose of the present writ petition in the following mutually agreeable terms:
(a) We quash and set aside the impugned order dated 09.04.202 1 passed by the Respondent No. 2 namely Additional Commissioner of State Taxs(Appeal), Purnea Division, Purnea in Form GST APL-04 and the order dated 09.02.202 1 passed by the Respondent No. 3 namely Assistant Commissioner of State Taxes, Saharsa Circle, Saharsa in GSTIN1 0APTPK23 1 9A1ZG;
(b) We accept the statement of the petitioner that ten per cent of the total amount, being condition prerequisite for hearing of the appeal, already stands deposited. If that were so, well and good. However, if the amount is not deposited for whatever reason(s), same shall be done before the next date;
(c) Further the petitioner undertakes to additionally deposit ten per cent of the amount of the demand raised before the Assessing Officer. This shall be done within four
(d) This deposit shall be without prejudice to the respective rights and contention of the parties and subject to the order passed by the Assessing Officer. However, if it is ultimately found that the petitioner’s deposit is in excess, the same shall be refunded within two months from the date of passing of the order;
(e) We also direct for de-freezing/de-attaching of the bank account(s) of the writ-petitioner, if attached in reference to the proceedings, subject matter of present petition. This shall be done immediately.
(f) Petitioner undertakes to appear before the Assessing Authority on 30th November,2021 at 10:30 A.M., if possible through digital mode;
(g) The Assessing Authority shall decide the case on merits after complying with the principles of natural justice;
(h) Opportunity of hearing shall be afforded to the parties to place on record all essential documents and materials, if so required and desired;
(i) During pendency of the case, no coercive steps shall be taken against the petitioner.
(j) The Assessing Authority shall pass a fresh order only after affording adequate opportunity to all concerned, including the writ petitioner;
(k) Petitioner through learned counsel undertakes to fully cooperate in such proceedings and not take unnecessary adjournment;
(l) The Assessing Authority shall decide the case on merits expeditiously, preferably within a period of two months from the date of appearance of the petitioner;
(m) The Assessing Authority shall pass a speaking order assigning reasons, copy whereof shall be supplied to the parties;
(n) Liberty reserved to the petitioner to challenge the order, if required and desired;
(o) Equally, liberty reserved to the parties to take recourse to such other remedies as are otherwise available in accordance with law;
(p) We are hopeful that as and when petitioner takes recourse to such remedies, before the appropriate forum, the same shall be dealt with, in accordance with law, with a reasonable dispatch;
(q) We have not expressed any opinion on merits and all issues are left open;
(r) If possible, proceedings during the time of current Pandemic [Covid- 19] be conducted through digital mode;
The instant petition sands disposed of in the aforesaid terms.
Interlocutory Application(s), if any, also stands disposed of.
Learned counsel for the respondents undertakes to communicate the order to the appropriate authority through electronic mode.
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