2022 (8) TMI 1173 - HC - GST

Violation of principles of natural justice - ex-parte order - fair opportunity of hearing not granted - Denial of Input tax Credit - credit denied for having been claimed after expiry of due date under Section 16(4) of the Bihar GST Act, 2017 for having been passed without issuance of any show cause notice to the petitioner - period April 2018 to March 2019 - HELD THAT - This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, it is opined that the order is bad in law. This is 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. Petition disposed off.

Issues involved:
Challenge to order denying Input Tax Credit, quashing of consequential demand, freezing of bank accounts, violation of principles of natural justice, interference by the Court, relief sought by the petitioner, remand to Assessing Authority, deposit of amount, de-freezing of bank accounts, appearance before Assessing Authority, decision on merits, cooperation in proceedings, time frame for decision, speaking order, liberty to challenge, conducting proceedings through digital mode.

Analysis:

1. Challenge to Order Denying Input Tax Credit:
The petitioner sought relief for quashing an order dated 21.03.2020 passed under Section 73(9) of Bihar GST Act, 2017, denying Input Tax Credit claimed for the period April 2018 to March 2019. The order was challenged on the grounds of being passed without issuance of a show cause notice, and for being ex parte in nature. The Court observed that the order lacked sufficient reasons and violated principles of natural justice by not providing a fair opportunity of hearing to the petitioner.

2. Quashing of Consequential Demand:
The petitioner also sought quashing of the consequential demand amounting to Rs. 20,16,316/- issued in Form GST-DRC-07 dated 23.03.2020. The Court, after considering the lack of procedural fairness and insufficient reasoning in the order, decided to quash and set aside the impugned order along with the consequential demand.

3. Freezing of Bank Accounts:
Another relief sought by the petitioner was the quashing of an order to freeze all bank accounts of the petitioner firm and its proprietor for recovery of the demand notice without providing a copy to the petitioner. The Court directed for the immediate de-freezing/de-attaching of the bank accounts, if attached in reference to the proceedings.

4. Violation of Principles of Natural Justice:
The Court emphasized the importance of principles of natural justice, highlighting that the order was passed ex parte without affording the petitioner sufficient time to represent their case. The Court intervened despite the availability of statutory remedy, citing the order's deficiencies in providing a fair hearing and adequate reasons for determination of the amount due.

5. Interference by the Court:
Although the Revenue had no objection to remanding the matter to the Assessing Authority, the Court decided to interfere due to the glaring issues in the order, including the violation of natural justice principles and lack of proper reasoning. The Court asserted its authority to intervene when an order is deemed bad in law.

6. Relief Sought by the Petitioner:
The petitioner sought various reliefs, including quashing of orders, deposit of a percentage of the demand amount, de-freezing of bank accounts, appearance before the Assessing Authority, decision on merits, cooperation in proceedings, and liberty to challenge the order and statutory provisions.

7. Remand to Assessing Authority:
The Court disposed of the petition by quashing the impugned orders and directing the petitioner to deposit a portion of the demand amount before the Assessing Officer. It also outlined specific terms for further proceedings, emphasizing compliance with natural justice principles and timely decision-making.

8. Conducting Proceedings Through Digital Mode:
Given the prevailing Covid-19 pandemic situation, the Court directed that proceedings, if possible, be conducted through digital mode to ensure continuity and safety.

In conclusion, the Court's judgment focused on upholding principles of natural justice, setting aside the impugned orders, directing procedural fairness in further proceedings, and providing necessary reliefs to the petitioner while maintaining a cooperative and expeditious approach to resolving the matter.

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