Patna High Court Quashes Ex-Parte GST Demand Order Passed Without Personal Hearing — King Bricks vs State of Bihar
Background and Nature of the Dispute
In a significant ruling reinforcing the principles of natural justice in GST adjudication proceedings, the Patna High Court set aside an ex-parte demand order that had been passed against King Bricks without affording any opportunity of personal hearing. The matter came before the Court by way of a writ petition challenging both the underlying show cause notice as well as the final demand order passed under the Bihar Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017.
The case of King Bricks Vs State of Bihar raises critical questions about procedural compliance in GST enforcement, particularly regarding effective communication of notices and the mandatory requirement of granting personal hearings before confirming tax demands.
The Impugned Orders and Demands
Ex-Parte Demand Order — April 2024
The primary challenge before the Court was directed against an ex-parte demand order bearing Reference No. ZD100424037900X dated 29.04.2024, along with a summary order issued in Form GST DRC-07 dated 29.04.2024. This order had been issued by the Deputy Commissioner of State Tax, Katihar Circle, Katihar, creating a consolidated demand of Rs. 26,66,667.40 — comprising tax, interest, and penalty — against the petitioner.
The demand pertained to the tax period April 2018 to March 2019 and was passed under sub-section (9) of Section 73 of the CGST/BGST Act, 2017.
Show Cause Notice — December 2023
The petitioner also challenged the antecedent Show Cause Notice bearing reference no. ZD1012230155915 dated 13.12.2023, along with a summary order in Form GST DRC-01 of the same date, issued under sub-section (1) of Section 73 of the CGST/BGST Act, 2017. The SCN had quantified a proposed demand of Rs. 25,86,667.96 for the same tax period.
Grounds Raised by the Petitioner
The petitioner advanced multiple grounds before the Patna High Court, both procedural and substantive in nature.
1. Improper Communication of Show Cause Notice
A key grievance raised was that the show cause notice dated 13.12.2023 was not effectively communicated to the petitioner. It was pointed out that the notice had merely been uploaded under the "additional notices and orders" tab on the GST portal, instead of the designated "notices and orders" tab. The petitioner contended that this technical misplacement effectively denied them actual knowledge of the notice, rendering the entire subsequent proceeding fundamentally defective.
2. Violation of Section 75(4) — No Personal Hearing Granted
The petitioner specifically invoked Section 75(4) of the CGST/BGST Act, 2017, which mandates that an opportunity of hearing must be provided where an adverse order is contemplated. It was argued that:
- No opportunity was granted to file a reply to the show cause notice.
- No personal hearing was scheduled or offered at any stage before the demand order was confirmed.
- The impugned demand order was therefore an ex-parte order passed in complete disregard of the statutory requirement under
Section 75(4).