Summary Order in GST DRC-07 quashed by Patna High Court for violating the principles of natural justice

The Patna High Court has overturned a GST DRC-07 order against K.R. Steel Traders, finding it violated the principles of natural justice. The court ruled that the petitioner was not given a fair opportunity to present their case, and the order was made ex parte without sufficient justification. The bank accounts of the petitioner were ordered to be unfrozen, and a fresh order must be passed after providing adequate hearing. K.R. Steel Traders has also agreed to deposit 10% of the demanded amount within four weeks, without prejudice to their rights.

In M/s K.R. Steel Traders v. The State of Bihar [Civil Writ Jurisdiction Case No.17795 of 2021 dated October 21, 2021], M/s K.R. Steel Traders ("the Petitioner") filed petition being aggrieved against Order dated August 16, 2019 passed by  the Joint Commissioner of State Taxes, Patna South Circle and Summary Order in Form GST DRC-07 dated August 29, 2019 passed by Deputy Commissioner of State Tax Patna South, Jurisdiction- Patna South, Patna in which the appeal of the Petitioner has been rejected merely on the grounds of being barred by limitation and both the orders were ex parte in nature.

The Hon’ble Patna High Court quashed the orders on the grounds of violation of principles of natural justice i.e. Fair opportunity of hearing was not given and said that no sufficient time was afforded to the Petitioner to represent his case and 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.

The Court further directed de-freezing/de-attaching of the bank accounts of the Petitioner, if attached in reference to the proceedings subject matter of present petition. This shall be done immediately. And the Assessing Authority shall pass a fresh order only after affording adequate opportunity of hearing to the Petitioner.

Further, the Petitioner undertakes to additionally deposit 10% of the amount of the demand raised before the Assessing Officer this shall be done within four weeks. And the Court directed that this deposit shall be without prejudice to the respective rights and contention of the parties and subject to the order passed by the Assessing Officer. However, if it is ultimately found that the Petitioner’s deposit is in excess, the same shall be refunded within two months from the date of passing of the order.

The Petition disposed of by the Court.