Tax Orders Set Aside for Natural Justice Violations; Court Orders 20% Deposit and Bank Account Unfreezing

The HC set aside ex-parte appellate and assessment orders under CGST and BGST Acts, finding violations of natural justice principles. The Court noted the orders were cryptic, non-speaking, and failed to provide the petitioner adequate opportunity to present their case. While acknowledging statutory remedies existed, the HC intervened due to fundamental procedural flaws. The petitioner was directed to deposit 20% of the demanded amount (10% immediately and 10% within four weeks), and the tax authority was ordered to unfreeze bank accounts and decide the matter on merits within two months after giving proper hearing to the petitioner.

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Issues:
Challenge to appellate order under Central Goods and Services Tax Act, 2017 and Bihar Goods and Services Tax Act, 2017 for being ex-parte and violative of natural justice principles.

Analysis:
The petitioner sought relief through a writ petition to quash an appellate order dated 13.01.2021 and an ex-parte order dated 08.08.2019, both issued under the Central Goods and Services Tax Act, 2017 and Bihar Goods and Services Tax Act, 2017. The High Court noted that the impugned order rejecting the petitioner's appeal was cryptic, misconceived, and non-speaking. The Court emphasized the importance of natural justice, highlighting that the petitioner was not given sufficient time to present their case, and the ex-parte order lacked adequate reasons to determine the tax liability. The Court decided to intervene despite statutory remedies, as the order was deemed bad in law due to violations of natural justice principles and lack of reasoning.

The Court, after considering the arguments and perusing the record, set aside the impugned orders and directed the petitioner to deposit ten percent of the total amount as a prerequisite for hearing the appeal. Additionally, the petitioner was required to deposit a further ten percent of the demand raised within four weeks. These deposits were to be without prejudice to the rights of the parties and subject to the Assessing Officer's order. The Court also ordered the immediate de-freezing/de-attaching of the petitioner's bank accounts related to the proceedings.

Furthermore, the Court directed the petitioner to appear before the Assessing Authority, who was instructed to decide the case on merits while complying with natural justice principles. Both parties were granted the opportunity to submit essential documents, and no coercive steps were to be taken against the petitioner during the case's pendency. The Assessing Authority was tasked with issuing a speaking order within two months, and the petitioner was given liberty to challenge the order if necessary. The Court emphasized expeditious resolution, leaving all issues open for further legal recourse.

In conclusion, the High Court disposed of the petition with detailed directions to ensure a fair and just resolution of the tax dispute, emphasizing adherence to natural justice principles and timely decision-making by the Assessing Authority. The judgment preserved the petitioner's rights while providing a framework for the case's progression within the legal system.

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