Simplified Explanation of the Judgment
In a significant decision, the Patna High Court set aside a GST assessment order against the petitioner, a commercial entity, on the grounds that it violated Section 73(8) of the Bihar Goods and Services Tax (BGST) Act. This provision clearly requires that a taxpayer be given a minimum of 30 days to respond to a show cause notice before any assessment order can be passed.
The dispute arose when the tax authorities issued a DRC-01 notice on 14 February 2021, asking the petitioner to respond to alleged tax discrepancies. However, instead of granting the full 30-day statutory period, the authorities passed an assessment order (DRC-07) merely nine days later, on 23 February 2021. The petitioner argued that this premature action was a direct violation of both the law and the principles of natural justice.
The petitioner also challenged subsequent actions, including:
- The rectified demand order (DRC-08) dated 8 April 2021, which upheld the original assessment and demanded over ₹92 lakh in tax and interest.
- The rejection of the appeal (APL-02) on procedural grounds, namely, failure to submit a certified copy of the order within the prescribed time. The petitioner argued that this was unjust, as the requirement for certified copies had already been removed by an amendment to the CGST Act on 26 December 2022.
- A request for refund of pre-deposit amounts totaling ₹9,47,176, paid to enable the appeal process.
The petitioner sought writs of mandamus and certiorari to quash the orders, stop recovery proceedings, and ensure the refund.
The High Court relied on its earlier decision in CWJC No. 14239 of 2024 (M/s Agarwal Tube Company vs. Union of India & Others), which dealt with the same legal issue. In that case, it had been held that failure to provide the minimum statutory time for reply rendered the assessment void.
Applying that precedent, the court set aside the impugned assessment order dated 23 February 2021, effectively granting the petitioner relief. As a result, the present writ petition was disposed of in terms of the Agarwal Tube Company judgment.
This ruling underscores the judiciary’s commitment to ensuring tax authorities adhere strictly to procedural safeguards and timelines specified under GST laws.
Significance or Implication of the Judgment
This judgment carries significant implications for both taxpayers and tax authorities in Bihar and across India:
- Protection of Due Process: It reinforces the importance of giving taxpayers a fair chance to present their case before tax demands are finalized.
- Strict Interpretation of Section 73(8): Authorities cannot bypass the 30-day notice period — doing so will render their orders legally invalid.
- Relief for Businesses: Commercial entities facing arbitrary or rushed tax assessments can rely on this precedent to protect their rights.
- Administrative Discipline: It sends a clear message to GST officers to follow statutory procedures meticulously, reducing the risk of legal challenges.
- Potential Refunds: Taxpayers who have paid pre-deposits for appeals in similar cases might be entitled to refunds if the underlying orders are quashed.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
- Whether an assessment order passed before the expiry of the minimum 30-day reply period under Section 73(8) of the BGST Act is valid?
Decision: No. The court quashed the order as it was issued prematurely, violating the statutory requirement and principles of natural justice. - Whether the appellate rejection for non-filing of certified copies was justified despite legal amendments removing such a requirement?
Observation: While the main focus was on the Section 73(8) violation, the petitioner’s argument highlighted administrative lapses in considering legal amendments. - Whether earlier precedent (CWJC 14239 of 2024) applied to the present case?
Decision: Yes. The facts were materially similar, and the precedent squarely applied, leading to the quashing of the order.
Judgments Relied Upon or Cited by Court
- CWJC No. 14239 of 2024 — M/s Agarwal Tube Company vs. Union of India & Others — Patna High Court.
Case Title
M/s. Ashok Leyland Limited vs. Union of India & Others
Case Number
Civil Writ Jurisdiction Case No. 1225 of 2025
Coram and Names of Judges
Hon’ble Mr. Justice P. B. Bajanthri
Hon’ble Mr. Justice S. B. Pd. Singh
Names of Advocates and Who They Appeared For
- For the Petitioner: Mr. Madan Kumar, Advocate; Mr. Brisketu Sharan Pandey, Advocate
- For the Respondents: Mr. Anshuman Singh, Sr. Standing Counsel, CGST & Customs; Mr. Amarpeet, Advocate
- For the State: Mr. Vivek Prasad, Government Pleader 7; Ms. Supragya (Assistant Counsel to GP 7)
Link to Judgment
65334912-3f23-41f1-97d4-bc369be33698.pdf
If you found this explanation helpful and wish to stay informed about how legal developments may affect your rights in Bihar, you may consider following Samvida Law Associates for more updates.
