Simplified Explanation of the Judgment
In a recent decision, the Patna High Court ruled in favor of a petitioner who challenged a Goods and Services Tax (GST) assessment order. The core issue was the denial of a mandatory personal hearing by the GST department before passing the assessment order.
The petitioner, a proprietorship firm registered under GST and based in Patna, had approached the court under Article 226 of the Constitution of India. The firm argued that the assessment order issued on 4th May 2024 was invalid because the department failed to provide a personal hearing, as required under Section 75(4) of the Central Goods and Services Tax (CGST) Act.
The court noted that while other legal issues raised by the petitioner (particularly those related to limitation) had already been settled against the petitioner in an earlier case (M/s Barhonia Engicon Private Limited v. Union of India, decided on 27th November 2024), the failure to provide a personal hearing was a standalone and valid ground for setting aside the order.
The bench, led by the Hon’ble Chief Justice and Hon’ble Justice Nani Tagia, ruled that the GST authorities had violated the legal mandate by not offering the petitioner a personal hearing, despite the statutory requirement. Consequently, the impugned assessment orders were quashed.
The court remitted the matter back to the Assessing Officer with a clear direction: the petitioner must be given a personal hearing. The hearing is scheduled for 7th January 2025. If the petitioner attends on this date or on the next adjourned date, the Assessing Officer is directed to pass a fresh order within three months or within the remaining limitation period—whichever is later.
This judgment reflects the judiciary’s consistent stance on upholding procedural fairness and due process in tax matters. It serves as a reminder to tax authorities to adhere strictly to statutory procedures before taking coercive steps like assessments or penalties.
Significance or Implication of the Judgment
This judgment is significant for small businesses, proprietorship firms, and individual GST registrants. It reiterates the importance of procedural safeguards—especially the right to a personal hearing—before tax authorities can finalize an assessment.
For taxpayers, it underscores their legal right to be heard before any liability is finalized. For government authorities, particularly the State Tax Department, the ruling is a reminder that failure to follow statutory mandates may render their actions void.
The decision strengthens administrative accountability and reinforces the judiciary’s role in ensuring that tax assessments are not arbitrary. It could also lead to more stringent procedural compliance by tax officers across Bihar.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
- Issue: Whether the GST assessment order dated 04.05.2024 was valid when passed without offering a personal hearing as mandated under Section 75(4) of the CGST Act.
- Court’s Decision: The order was set aside.
- Reasoning: The statutory requirement of providing a personal hearing was violated. This is a fundamental procedural lapse rendering the order unsustainable.
- Issue: Whether the grounds related to limitation raised by the petitioner held merit.
- Court’s Decision: These grounds were rejected based on prior precedent.
- Reasoning: The issue had already been decided against the petitioner in CWJC No. 4180 of 2024, in the case of M/s Barhonia Engicon Private Limited v. Union of India.
Judgments Referred by Parties
- M/s Barhonia Engicon Private Limited v. Union of India & Ors., CWJC No. 4180 of 2024 (decided on 27.11.2024)
Judgments Relied Upon or Cited by Court
- M/s Barhonia Engicon Private Limited v. Union of India & Ors., CWJC No. 4180 of 2024 (decided on 27.11.2024)
Case Title
M/s Krishna Enterprises v. The State of Bihar & Others
Case Number
Civil Writ Jurisdiction Case No. 19382 of 2024
Coram and Names of Judges
Hon’ble the Chief Justice K. Vinod Chandran
Hon’ble Mr. Justice Nani Tagia
Names of Advocates and who they appeared for
- For the Petitioner: Mr. Bijay Kumar Gupta, Advocate
- For the Respondents: Mr. Government Pleader 07
Link to Judgment
e498856a-4d93-4c77-b38d-cb9fccd11642.pdf
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