Simplified Explanation of the Judgment
In a recent ruling, the Patna High Court addressed a tax dispute involving a private consultancy firm and the State Tax Department under the Goods and Services Tax (GST) Act, 2017. The petitioner had challenged an ex parte (one-sided) assessment order issued by the tax authorities without granting them a proper hearing, as well as the rejection of their appeal on the grounds of delay.
The petitioner argued that the assessment order dated 31 August 2019 was issued without giving them a reasonable opportunity to be heard, which violated the principles of natural justice. They also claimed that although they filed an appeal on 23 June 2020, it was rejected due to a delay beyond the prescribed time limit under Section 107 of the GST Act.
The Court acknowledged that the delay in filing the appeal was caused by the COVID-19 pandemic and relied on the Supreme Court’s directions in a suo motu case (In Re: Cognizance for Extension of Limitation). These directions extended the limitation period for all legal proceedings during the pandemic. Accordingly, the High Court found that the appeal should not have been rejected on grounds of delay.
Further, the Court noted that the assessment order was passed under Section 62(1) of the GST Act, which allows for a best judgment assessment if a taxpayer fails to file returns. However, since the order imposed financial liabilities, it had significant civil consequences and therefore required adherence to natural justice—meaning the taxpayer should have been given a proper chance to present their case.
The Court also took on record the petitioner’s statement that they had already deposited 45% of the assessed tax amount and were willing to deposit an additional ₹3 lakh. Accepting this submission, the Court directed the assessing authority to reconsider the matter afresh.
Significance or Implication of the Judgment
This judgment underscores the importance of upholding procedural fairness in tax assessments. Even under regulatory provisions like best judgment assessments, authorities must follow the principles of natural justice, especially when civil liabilities are imposed. The decision also reaffirms the applicability of Supreme Court guidelines extending limitation periods during the pandemic—offering relief to many taxpayers and litigants who faced logistical difficulties in accessing justice during that time.
For the public, this ruling provides reassurance that courts will protect procedural rights and that authorities cannot take arbitrary action, especially when it affects financial or civil interests. For the government, it serves as a reminder to ensure transparency and fairness in tax administration.
Legal Issue(s) Decided and the Court’s Decision
- Whether the appeal filed beyond the prescribed limitation period could be entertained during the pandemic:
✅ Yes. The delay was condonable in light of the Supreme Court’s suo motu order extending limitation periods due to COVID-19. - Whether the assessment order under Section 62(1) GST Act was valid when passed without hearing the petitioner:
❌ No. The order was quashed for violating the principles of natural justice. - Was the petitioner entitled to re-hearing on the assessment of their tax liability?:
✅ Yes. The matter was remanded to the assessing authority for fresh consideration.
Judgments Relied Upon or Cited by Court
- In Re: Cognizance for Extension of Limitation, Suo Motu Writ (Civil) No. 3 of 2020, Hon’ble Supreme Court of India.
Case Title
Bihar Risk Management Consultancy Pvt. Ltd. vs. State of Bihar & Ors.
Case Number
Civil Writ Jurisdiction Case No. 2097 of 2021
Citation(s)– 2021(2) PLJR 135
Coram and Names of Judges
Hon’ble the Chief Justice Sanjay Karol
Hon’ble Mr. Justice S. Kumar
Names of Advocates and who they appeared for
Mr. Gautam Kumar Kejriwal — for the Petitioner
Mr. Lalit Kishore, Advocate General, and Mr. Vikash Kumar — for the Respondents
Link to Judgment
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