Rounak Int Udyog vs. The State Of Bihar

Held

The Court held that the respondents failed to establish a yardstick for correlating the quantum of coal consumed with the production of bricks to infer manipulation in generating invoices and e-way bills. The Court noted that for producing one ton of bricks, the coal required typically ranges from 100 to 250 kilograms, and this proportionality exercise was not undertaken by the respondents. Consequently, the Court found that the petitioner had made out a case for interference with the impugned decision. The Court set aside the impugned order. The respondents were directed to take fresh steps strictly in accordance with technical issues and to provide the petitioner with ample opportunity of hearing. This exercise was to be completed within six months from the date of receipt of the order. The petitioner was directed to cooperate with the officials. The writ petition was allowed.

Facts

The petitioner, Rounak Int Udyog, a proprietorship concern, filed a writ petition challenging an order dated 06.12.2023 passed by the Assistant Commissioner of State Tax, Madhubani (Respondent No. 2) for the tax period 2021-22. The impugned order, passed under Section 73 of the Bihar Goods and Services Tax Act, 2017, levied tax, interest, and penalty based on an estimation of sales derived from the purchase of coal. The petitioner contended that this estimation was arbitrary, made without considering tax invoices and GST returns, and lacked any statutory basis for such guesswork. The petitioner also argued that the order was passed without issuing a notice under Section 75(4) of the Act and that the show cause notice, subsequent notice, and the final order were identical, indicating a lack of consideration of the petitioner's written submissions and application of judicial mind, thus violating principles of natural justice. The petitioner sought to set aside the demand raised in Form GST DRC-07.

Key Issues

1. Whether the order dated 06.12.2023, passed by the Assistant Commissioner of State Tax, Madhubani, for the tax period 2021-22, is illegal and without jurisdiction for levying tax, interest, and penalty based on an estimation of sales from coal purchases without considering tax invoices and GST returns, and in the absence of a statutory provision for such estimation? 2. Whether the impugned order is vitiated by a violation of principles of natural justice, specifically for not issuing a notice under Section 75(4) of the Bihar Goods and Services Tax Act, 2017, before passing an adverse order, and for failing to consider the petitioner's written explanation/submission? Petitioner's Arguments: The petitioner argued that the estimation of sales based solely on coal purchases was arbitrary guesswork, lacking statutory backing, and ignored the petitioner's tax invoices and GST returns. They contended that the order was passed without proper notice under Section 75(4) and that the respondents failed to consider their written submissions, rendering the order illegal and violative of natural justice. They relied on the principle that adverse orders cannot be passed without affording a proper hearing and considering the explanation provided. Respondent's Arguments: The judgment does not record any specific arguments made by the respondent.