Order passed by Assessing Authority being ex-parte and in violation of principle of natural justice liable to be quashed

Last updated: 27 December 2022

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Quick Summary

The Patna High Court has ruled that tax assessment orders passed without a proper hearing, known as ex-parte orders, are invalid. In this case, the court found that the Assistant Commissioner of State Tax failed to give the petitioner adequate time to present their case, violating the principles of natural justice. Consequently, the court quashed the orders and sent the matter back for a fresh assessment, ensuring the petitioner is given a fair opportunity to be heard.

Court :
Patna High Court

Brief :
The Hon'ble Patna High Court ("the High Court") in the case of M/s. Cement House v. UOI [W.P.(C) No. 15680 of 2022] dated December 09, 2022, held that order passed by the Assistant Commissioner of State Tax being ex-parte and in violation of principle of natural justice is liable to be quashed. Further, the High Court remanded back the matter to the Assistant Commissioner of State Tax to decide the case on merits and on the principles of natural justice.

Citation :
W.P.(C) No. 15680 of 2022

The Hon'ble Patna High Court ("the High Court") in the case of M/s. Cement House v. UOI [W.P.(C) No. 15680 of 2022] dated December 09, 2022, held that order passed by the Assistant Commissioner of State Tax being ex-parte and in violation of principle of natural justice is liable to be quashed. Further, the High Court remanded back the matter to the Assistant Commissioner of State Tax to decide the case on merits and on the principles of natural justice.

Facts

The Assistant Commissioner of State Tax ("the Assessing Authority") issued Assessment Orders ("AO") dated February 06, 2021, and March 06, 2021, for the Financial Year 2019-20 (collectively referred to as "the Orders") demanding total tax of Rs. 32,00,296/.

The Petitioner filed the Writ Petition before the High Court, interalia praying to quash the Orders as being passed ex-parte (order passed without providing opportunity of being heard) which were in violation of principle of natural justice.

Issue

Whether the AO can be set aside on the grounds of being ex-parte?

Held

The High Court held:

The Orders were ex parte in nature which was against the principle of natural justice. Also, sufficient time was not given to the Petitioner to represent its case.
The Orders were quashed.
Further, the Assessing Authority was instructed to initiate the case on merits after complying with the principle of natural justice and to pass a fresh Order after providing adequate opportunity of being heard to concerned parties.

FAQ :

The Patna High Court ruled that ex-parte orders, which are made without giving the affected party a chance to be heard, are invalid and should be quashed.

The assessment orders were quashed because they were passed ex-parte and violated the principle of natural justice, as the petitioner was not given sufficient time to present their case.

In this context, the principle of natural justice means that a person must be given a fair hearing and adequate opportunity to present their side of the story before a decision is made.

The case has been remanded back to the Assistant Commissioner of State Tax to be decided on its merits, with a fresh order to be passed after complying with the principles of natural justice and providing an adequate opportunity for the parties to be heard.