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IN THE HIGH COURT OF JUDICATURE AT PATNA
SANJAY KAROL, PARTHA SARTHY, JJ.
M/s Sandeep Traders – Appellant
Versus
The State of Bihar through Commissioner of State Tax, New Secretariat, Patna – Respondent
Civil Writ Jurisdiction Case No.17286 of 2022
Decided on : 09-01-2023
Tax Credit Rejection - Tax Law - BGST Act, Section 16(2)(c), Section 73(9) - The court discussed the rejection of input tax credit by the respondent under section 16(2)(c) of the BGST Act and the imposition of tax and penalty under section 73(9). The court found that the order was bad in law due to violation of principles of natural justice and passed ex parte without assigning reasons. The court quashed the impugned order and directed the petitioner to deposit 20% of the demand raised before the Assessing Officer.
Fact of the Case:
The petitioner sought relief from the court to set aside the order rejecting input tax credit and imposing tax and penalty. The respondent had rejected the input tax credit claim and imposed a tax and penalty amounting to Rs. 8,43,770 under section 73(9) of the BGST Act. The petitioner also prayed for quashing the order for attaching the bank account.
Finding of the Court:
The court found that the order was bad in law due to violation of principles of natural justice and passed ex parte without assigning reasons. The court quashed the impugned order and directed the petitioner to deposit 20% of the demand raised before the Assessing Officer.
Issues: Violation of principles of natural justice, ex parte order, rejection of input tax credit, imposition of tax and penalty, attachment of bank account
Ratio Decidendi: The court can interfere where the order is bad in law, violation of principles of natural justice, and ex parte order without assigning reasons. The petitioner must deposit 20% of the demand raised before the Assessing Officer.
Final Decision: The court quashed the impugned order, directed the petitioner to deposit 20% of the demand raised before the Assessing Officer, and ordered for de-freezing/de-attaching of the bank account(s) of the writ-petitioner.
JUDGMENT :
1. Heard learned counsel for the parties.
2. Petitioner has prayed for the following relief(s):-
(ii) For setting aside order dated 25.05.2022 passed by Joint Commissioner of State Tax Jurisdiction, Sahabad Circle, Aarah has rejected the input tax credit of the petitioner and imposed the tax including tax and penalty amounting of Rs. 8,43,770/-on the petitioner under section 73(9) of BGST Act and a direction was issued to raised demand in the Form of GST DRC 07.
(iii) For setting aside the demand notice isued in the Form of DRC 07 bearing Reference No. ZD1005220088470 dated 25.05.2022, whereby and where under an amount of Rs. 8,43770/-has been imposed as Tax, Interest and Penalty.
(iv) For setting aside Order dated 07.11.2022 issued by respondent no.3 whereby and where under a direction was made to issue Form DRC-13 for attachment of Bank Account of the Petitioner.
(v) For setting aside DRC-13 issued by Assistant Commissioner of State Tax, Sahabad Circle, Aaraha vide Reference Recovery No. 318 Dated 07.11.2022 to Punjab National Bank, Station Road, Ara to attached the Bank Account of the Petitioner and recover an amount of Rs. 13,30,464/-.
(vi) For releasing all of the Bank Account of the petitioner which has been attached by the respondent authorities.
(vii) For issuance of an appropriate Writ(s), order(s), and/or direction(s), as Your Lordships may deem fit and proper in the facts and circumstances of this case in the interest of justice.
3. It is brought to our notice that vide impugned order dated 25.05.2022, passed by the Respondent No. 2, namely, the Joint Commissioner of State Tax, Sahabad Circle, Araha, Bihar (Ref. No.ZD1005220088470) and demand notice in Form GST DRC-07 dated 25.05.2022 (Ref. No. ZD1005220088470), for the period July, 2017 to March, 2018, a demand of Rs.8,43,770/-has been raised. The petitioner has also prayed for quashing of the order dated 07.11.2022, passed by respondent No.3, namely, the Assistant Commissioner of State Tax, Sahabad Circle, Aaraha, Bihar issued in Form DRC-13 whereby bank account of the petitioner has been attached.
4. 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.
5. Statement accepted and taken on record.
6. 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 reasons sufficient 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
The court can interfere where the order is bad in law, violation of principles of natural justice, and ex parte order without assigning reasons.
The court can intervene and set aside an order if it finds a violation of principles of natural justice and lack of reasons in the order, even if there is a statutory remedy available.
The violation of principles of natural justice and the lack of sufficient reasons for determining the amount due and payable by the assessee can lead to the quashing of orders.
Courts may interfere with orders, notwithstanding statutory remedies, in cases of violation of principles of natural justice and ex parte orders.
Violation of principles of natural justice and lack of sufficient reasons for determining the amount due and payable by the assessee.
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