2021 (2) TMI 748 - HC - GST

Violation of Principles of Natural Justice - seeking opportunity of submitting its case and also of hearing on the issues of facts and law before any fresh decision is taken by the respondent assessing authority - HELD THAT - The principles of natural justice in passing the order stands violated - the impugned order dated 30.11.2019 passed by the Respondent No.2, the Joint Commissioner of Sate Taxes, Danapur Circle, Patna needs to be quashed and set aside, for the same to have been passed without following the principles of natural justice. In terms of the impugned order, financial liability stands fastened. Thus, it entails civil consequences, seriously prejudicing the petitioner inasmuch as, without affording any adequate opportunity of hearing or assigning any reason. It stands clarified that deposit of such amount would be without prejudice to the respective rights and contentions of the parties and the order which the authority may pass upon the matter being remanded for consideration afresh - the impugned order dated 30.11.2019 passed by the Respondent No.2, the Joint Commissioner of Sate Taxes, Danapur Circle, Patna for the period 1st quarter of 2017-18 under Section 73(9) (50) of Bihar Goods and Service Tax Act, 2017 is set aside and following directions issued (a) the petitioner shall deposit a sum of ₹ 10 lacs with the authority on or before 6th February, 2021; (b) the petitioner shall appear before the authority on 6th February, 2021 in his office at 10 30 A.M., on which date he shall place on record additional material, if so required and desired; (c) also, further opportunity shall be afforded to the parties to place additional material, if so required and desired; (d) petitioner undertakes to fully cooperate and not take any unnecessary adjournment; (e) the authority shall decide the matter on merits, in compliance of the principles of natural justice, on or before 3rd April, 2021; (f) liberty reserved to the parties to take recourse to such remedies as are otherwise available in accordance with law; (g) we have not expressed any opinion on merits and quashed the order only on the ground of violation of principles of natural justice. (h) if necessary, proceedings during the time of current Pandemic Covid-19 would be conducted through digital mode; (i) needless to add, with the passing of the order, if it is eventually found that deposit made by the petitioner is in excess of the amount determined due and payable, the same shall positively be refunded expeditiously as per the provisions of the statute. Petition disposed off.

Summary

Issues:
1. Quashing of order dated 30.11.2019 by the Joint Commissioner of State Taxes
2. Violation of principles of natural justice
3. Financial liability without adequate opportunity of hearing
4. Petitioner's willingness to deposit ?10 lacs
5. Directions for further proceedings and deposit

Quashing of Order:
The petitioner sought a writ of certiorari to quash the order dated 30.11.2019 passed by the Joint Commissioner of State Taxes, alleging a lack of opportunity for filing a comprehensive reply and hearing. The High Court agreed that the principles of natural justice were violated in passing the order without affording adequate hearing or assigning reasons. Consequently, the impugned order was quashed and set aside due to its civil consequences prejudicing the petitioner.

Violation of Principles of Natural Justice:
The High Court concurred with the petitioner's counsel that the order violated the principles of natural justice. It emphasized the importance of providing a fair hearing and opportunity for the petitioner to present its case. The court found the actions of the assessing authority to be non-responsive and lacking communication with the petitioner, thus denying the right to an adequate opportunity of hearing.

Financial Liability and Opportunity for Hearing:
The impugned order imposed financial liability on the petitioner without proper consideration of facts and law, leading to serious prejudice. The court acknowledged the petitioner's readiness to deposit ?10 lacs without prejudice to their rights. It emphasized the need for a fresh decision after affording a full opportunity for submission and hearing on the issues of facts and law.

Willingness to Deposit ?10 lacs:
The petitioner expressed willingness to deposit ?10 lacs within two weeks, which was accepted by the court. The deposit was clarified to be without prejudice to the parties' rights and contentions, with the authority's decision being subject to reconsideration based on the fresh submissions and hearing.

Directions for Further Proceedings and Deposit:
The High Court issued directions for further proceedings, including the deposit of ?10 lacs by a specified date, appearance before the authority, provision of additional material if required, and a decision on merits in compliance with the principles of natural justice. The court reserved liberty for parties to seek remedies as per law and clarified that the order was quashed solely on the ground of violating natural justice principles. Additionally, proceedings during the pandemic were to be conducted digitally, and any excess deposit would be refunded promptly as per statutory provisions.

This judgment disposed of the petition with the specified terms and provided clarity on the conduct of further proceedings and the deposit of funds.