The Patna High Court set aside an ex-parte assessment order under the Goods and Services Tax (GST) regime and also quashed the appellate authority’s rejection on limitation grounds, remanding the matter for a fresh decision with strict timelines. The Court emphasized fair hearing, compliance with the Supreme Court’s pandemic limitation orders, and a balanced interim arrangement through a conditional deposit.

The petitioner, a registered assessee, approached the High Court challenging (i) an ex-parte “best judgment” assessment under Section 62(1) of the Central/State GST Act, and (ii) the appellate order dismissing the statutory appeal as time-barred. After hearing both sides, the Division Bench (Hon’ble the Chief Justice and Hon’ble Mr. Justice S. Kumar) disposed of the writ by quashing both orders and remanding the matter to the assessing authority, with the petitioner to appear on a fixed date and timelines set for a fresh, reasoned decision on merits.

Simplified Explanation of the Judgment

This case revolves around two core grievances of the aggrieved taxpayer under GST law. First, the original assessment was made ex-parte under Section 62(1)—a provision that allows a “best judgment” assessment when a registered person fails to furnish returns. The petitioner argued that the order was passed without proper opportunity, fastening financial liability and thus carrying significant civil consequences. Second, when the petitioner tried to challenge that order, the statutory appeal was thrown out as time-barred, ignoring the pandemic-related extensions directed by the Supreme Court.

The High Court accepted that the appellate authority could not have ignored the Supreme Court’s blanket extension of limitation during COVID-19 (Suo Motu Writ (Civil) No. 3 of 2020, “Re: Cognizance for Extension of Limitation”). Because that nationwide order extended statutory time limits affected by the pandemic, the appeal could not be rejected purely on delay. Consequently, the appellate rejection order dated 20.08.2020 was quashed.

On the merits of the original assessment, the Court found that the ex-parte order under Section 62(1) had been passed in breach of natural justice: it imposed financial liability without granting adequate opportunity of hearing or furnishing reasons. Given the civil consequences, the Court held that the assessment could not stand and therefore set it aside.

To balance equities, the Court recorded the petitioner’s statement that 45% of the amount had already been deposited and, without prejudice to rights and contentions, the petitioner was willing to deposit an additional ₹3,00,000 by a specified date. The Bench accepted this statement and clarified that the fresh decision on remand would be independent of this deposit; if, in the end, the amount paid exceeded what was legally due, it must be refunded expeditiously under the statute.

The Court then issued a clear, time-bound roadmap:

• The petitioner must deposit ₹3,00,000 on or before 09.03.2021.
• The petitioner must appear before the assessing authority on 09.03.2021 at 10:30 A.M., with liberty to place additional materials.
• Both sides would get a further opportunity to file materials, with the authority directed to decide the matter strictly on merits and in compliance with natural justice.
• A final order must be passed on or before 03.05.2021.
• Proceedings, if necessary, may be conducted through digital mode, in view of the ongoing pandemic.
• No opinion was expressed on merits; the prior orders were quashed only for violation of natural justice and improper rejection on limitation.
• Liberty was preserved to avail statutory remedies after the fresh decision.

In short, the High Court restored the petitioner’s right to a fair hearing by removing the obstacles created by an ex-parte assessment and an appellate dismissal on limitation, while also ensuring that revenue interests were protected through an interim deposit and an expedited schedule.

Significance or Implication of the Judgment (For general public or government)

1. Reaffirmation of Natural Justice in GST Assessments: Even in “best judgment” scenarios under Section 62(1), authorities must provide an adequate opportunity to be heard and give reasons before fastening financial liability. Breach attracts judicial correction.
2. Respect for Pandemic Limitation Extensions: Appellate forums cannot reject appeals on limitation without considering the Supreme Court’s blanket extensions during COVID-19. This promotes uniformity and fairness across fiscal adjudication.
3. Balanced Interim Protection: Courts can impose reasonable conditions—like a provisional deposit—so that taxpayers get a fair hearing and the revenue’s interests remain safeguarded pending fresh adjudication. The promise of prompt refund if excess is found encourages cooperative compliance.
4. Time-Bound Remand: Fixing dates for appearance and final orders ensures that disputes do not linger, benefiting both taxpayer and department while reducing docket congestion.
5. Digital Proceedings Endorsed: The Court’s openness to virtual hearings reflects adaptability in tax administration during emergencies, improving access to justice.

Legal Issue(s) Decided and the Court’s Decision with reasoning

• Whether the appellate authority could dismiss the statutory appeal as time-barred during the COVID-19 period:
  Decision: No. The appellate authority could not ignore the Supreme Court’s order extending limitation across India. The High Court quashed the appellate rejection order dated 20.08.2020. Reasoning: The pandemic-triggered extensions applied to such appeals; refusing to condone or recognize that extension was impermissible.
• Whether the ex-parte assessment under Section 62(1) could stand despite lack of adequate opportunity and reasons:
  Decision: No. The assessment order dated 31.08.2019 was set aside for violating principles of natural justice. Reasoning: The order fastened financial liability, entailing civil consequences; without adequate hearing or articulated reasons, it could not be sustained.
• What interim arrangement should govern pending fresh adjudication:
  Decision: The petitioner’s statement of prior deposit (~45%) and willingness to deposit ₹3,00,000 more was accepted; deposit to be without prejudice, and any excess to be refunded promptly after final determination. Reasoning: This balances taxpayer’s right to a de novo hearing with protection of revenue, pending the meritorious outcome.
• Timelines and mode of hearing on remand:
  Decision: Fixed dates for deposit, personal appearance (09.03.2021 at 10:30 A.M.), and final order (on or before 03.05.2021); proceedings may be held digitally if required. Reasoning: Time-bound, transparent procedure ensures fairness and efficiency.

Judgments Relied Upon or Cited by Court (with citations)

• Supreme Court, Suo Motu Writ (Civil) No. 3 of 2020 — Re: Cognizance for Extension of Limitation (COVID-19 limitation extension).

Case Title

Petitioner vs. State of Bihar & Ors. (Patna High Court)

Case Number

Civil Writ Jurisdiction Case No. 2097 of 2021

Citation(s)

2021(2) PLJR 135

Coram and Names of Judges

Hon’ble Mr. Justice Sanjay Karol, Chief Justice; Hon’ble Mr. Justice S. Kumar.

Names of Advocates and who they appeared for

• For the petitioner: Mr. Gautam Kumar Kejriwal, Advocate.
• For the respondents (State): Mr. Lalit Kishore, Advocate General; Mr. Vikash Kumar, Advocate.

Link to Judgment

https://patnahighcourt.gov.in/viewjudgment/MTUjMjA5NyMyMDIxIzEjTg==-Cy5oSHtJ2JI=

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