Ex-parte Order are violative of principles of natural justice

By:

The Hon’ble High Court, Patna in the matter of M/s G. Power Solution v. State of Bihar [Civil Writ Jurisdiction Case No. 11384 of 2022 dated August 17, 2022] set aside the order passed by the revenue department for denying Input Tax Credit (“ITC”), raising demand, and direction given for freezing the bank account on the ground that the orders are in violation of principles of natural justice and was ex-parte in nature.

Facts:

M/s G. Power Solutions (“the Petitioner”) has prayed for quashing the following orders:

  • Order dated March 21, 2020 (“the Impugned order”) passed by the Revenue Department (“the Respondent”) under Section 73(9) of the Bihar Goods and Services Tax Act, 2017 whereby the ITC claimed by the Petitioner was denied for having been claimed after the expiry of due date.
  • The consequential demand raised for INR 20,16,316 in Form GST DRC-07.
  • The notice issued to a third person in Form GST DRC-13, issued by the Respondent to the banks wherein the direction was issued to freeze all the bank account of the Petitioner and his firm without even informing to the Petitioner.
  • The Petitioner contented that the order appears to be ex-parte in nature.

Issue:

  • Whether the prayers made by the Petitioner for quashing the above orders be considered?

Held:

The Hon’ble High Court, Patna in Civil Writ Jurisdiction Case No.11384 of 2022 dated August 17, 2022 has held as under:

  • The order is bad in law for two reasons- (a) violation of principles of natural justice i.e. 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 Petitioner.
  • Set aside and quashed the Impugned order; Summary of the order in Form GST DRC-07 and the notice to a third person in Form GST DRC-13, issued by the Respondent.
  • The Petitioner undertakes to deposit 20% of the amount of the demand raised before the Assessing Officer within four weeks and such deposit shall be without prejudice to the rights and contention of the parties.
  • Stated that, the amount deposited in excess by the Petitioner shall be refunded within two months from the date of passing the order.
  • Directed for de-freezing of the bank accounts of the Petitioner, if attached in reference to the proceedings.
  • The Assessing Authority shall decide the case on merits after complying with the principles of natural justice and opportunity of hearing shall be afforded to the parties and place on record all the essential documents.
  • The Petitioner undertakes to fully cooperate in such proceedings and not take unnecessary adjournment and liberty shall be reserved to the Petitioner to challenge the order, if required and desired.

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