Quashed summary revised GST demand cannot be made without giving the assessee a reasonable opportunity to be heard

The Patna High Court has ruled that revised GST demands are invalid if the assessee was not given a proper opportunity to be heard. In this case, the court found that the tax authorities failed to provide sufficient time or a fair hearing to the petitioner before issuing orders. Consequently, these orders were quashed, and the freezing of the petitioner's bank accounts was lifted. The case has been sent back for a fresh decision, ensuring principles of natural justice are followed.

The Hon'ble Patna High Court, in M/s Manoj Kumar v. The State of Bihar and Ors. [Writ Petition No.17524 of 2021 decided on October 6, 2021] has held that a demand made under GST laws on the basis of orders passed where the assessee was not given a reasonable opportunity to be heard is not maintainable as it violates the principles of natural justice.

Facts:

M/s Manoj Kumar (“the Petitioner') had filed an appeal before the Additional Commissioner of State Taxes (Appeal), Purnea Division, Purnea (“Respondent 2') against the order of the Assistant Commissioner of State Taxes, Saharsa Circle, Saharsa (“Respondent 3') dated February 9, 2021. The said appeal was dismissed via the order by Respondent 2 on April 9, 2021.

Subsequently, a summary revised GST demand was made to the Petitioner.

The Petitioner preferred the present Writ Petition against this demand by stating that the impugned orders passed by Respondent 3 and subsequently Respondent 2 indicate that no fair opportunity of hearing was afforded to the Petitioner which make the impugned orders liable to be set aside on the ground of violation of principles of natural justice.

Held:

The Hon'ble Patna High Court, Writ Petition No.17524 of 2021 decided on October 6, 2021 held as under:

• The counsel for the Revenue Department stated that they have no objection if the matter is remanded to the Assessing Authority for deciding the case afresh and that during pendency of the case, no coercive steps shall be taken against the Petitioner. While taking the statement on record, the Hon'ble Court opined that it has the jurisdiction to examine the veracity of the impugned orders irrespective of the said guarantees given by the Revenue Department.
• Subsequently, the Court observed that the orders are manifestly bad in law due to 2 reasons. Firstly, that no sufficient time was afforded to the Petitioner to represent his case which violates the principle of natural justice. Secondly, that the orders passed by Respondent 2 and Respondent 3 are ex-parte in nature, and do not assign any sufficient reasons as to how the officer could determine the amount due and payable by the Petitioner. Thus, the orders violate the principle of natural justice.
• Hence, the impugned orders were quashed. The bank accounts of the Petitioners were ordered to be relieved from being freezed under the impugned orders. The Assessing Authority has been ordered to decide the case on merits after complying with the principles of natural justice whereby no coercive steps must be taken against the Petitioner during the pendency of the case.