Facts of the Case

The petitioner, Ratneshwari Prasad Thakur, a resident of Muzaffarpur, Bihar and a registered person under GSTN 10ACAPT7136Q2ZA, approached the High Court of Judicature at Patna under Article 226 of the Constitution challenging an order dated 12.01.2021 passed by the Assistant Commissioner of State Tax, East Circle, Muzaffarpur (Respondent No. 2) in Reference No. ZA1003200020204, along with the consequential summary of the demand in Form GST DRC-07 of the same date. The petitioner's case was that the order had been passed without giving him a genuine opportunity to be heard and without disclosing the basis on which the tax liability was quantified. The matter was heard by a Division Bench of the Chief Justice and Justice S. Kumar on 21.02.2022.

Issues Involved

  1. Whether a GST demand order passed without affording sufficient opportunity of hearing to the assessee is sustainable in law.
  2. Whether an ex parte order that discloses no reasons for the quantification of tax can be sustained merely because a statutory appellate remedy exists.
  3. Whether the writ court can interfere under Article 226 notwithstanding an available statutory remedy of appeal.

Petitioner's Arguments

  • The impugned order dated 12.01.2021 and the consequential DRC-07 summary were passed without granting sufficient time to represent his case.
  • The order was ex parte in nature and did not disclose any reasons or basis on which the officer determined the amount held due and payable.
  • The order therefore violated the principles of natural justice and entailed serious civil consequences, including attachment of the petitioner's bank account.

Respondent's Arguments

  • Learned counsel for the Revenue did not oppose the petition on merits and had no objection to the matter being remanded to the Assessing Authority for a fresh decision.
  • The Revenue agreed that the case be decided afresh on merits and undertook that no coercive steps would be taken against the petitioner during the pendency of proceedings.

Court Order / Findings

  • The Court held that, notwithstanding the availability of a statutory remedy, it is not precluded from interfering under Article 226 where an order is ex facie bad in law.
  • Two grounds warranted interference: (a) violation of natural justice, as the petitioner was not given sufficient time to represent his case; and (b) the order was ex parte and did not assign sufficient reasons, even discernible from the record, as to how the tax amount was determined.
  • The Bench quashed the order dated 12.01.2021, the order in Reference No. ZA1003200020204, and the summary in Form GST DRC-07, remanding the matter to the Assessing Authority for a fresh, reasoned decision after complying with natural justice.
  • The petitioner was directed to deposit 20% of the demand raised within four weeks, without prejudice to the rights of the parties, with any excess to be refunded within two months if the deposit ultimately proves excessive.
  • The Court directed immediate de-freezing/de-attachment of the petitioner's bank account(s) attached in connection with the proceedings, and directed that no coercive steps be taken during pendency.
  • The Assessing Authority was directed to pass a fresh speaking order on merits, preferably within two months from the petitioner's appearance, after affording adequate opportunity to all concerned.

Important Clarification

  • A GST assessment or demand order passed ex parte, without a genuine opportunity of hearing and without disclosed reasons for the quantification of tax, is liable to be set aside in writ jurisdiction on the short ground of violation of natural justice, notwithstanding the existence of an alternate statutory appellate remedy.
  • Such relief may be conditioned on a partial pre-deposit and interim protection such as de-attachment of bank accounts, while leaving all issues on the merits of the underlying tax liability open for fresh adjudication.

Sections Involved

  • Bihar Goods and Services Tax Act, 2017 - the statute under which the impugned assessment/demand order was passed by the Assistant Commissioner of State Tax.
  • Form GST DRC-07, GST Rules, 2017 - the summary of the order by which the demand was communicated to the petitioner.
  • Article 226, Constitution of India - the writ jurisdiction invoked to challenge the ex parte order despite the existence of an appellate remedy.

Decision – In Favour of

Disposed of with directions, substantially in favour of the Assessee. The ex parte demand order was quashed for violation of natural justice and absence of reasons, but the matter has been remanded for fresh adjudication on merits subject to a 20% pre-deposit, with the Court expressing no opinion on the merits of the underlying tax liability.

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No. 2762 of 2022
  • Coram: Hon'ble the Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 21.02.2022
  • Parties: Ratneshwari Prasad Thakur vs State of Bihar & Anr.

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.