Morlatis Engineering And Construction Private Limited vs. State Of Bihar

Held

The Court held that the author of the impugned order had not taken note of each and every contention raised by the petitioner, including judicial pronouncements cited in their submission. Exercising quasi-judicial functions requires the authority to consider each contention against the show cause notice; otherwise, issuing a show cause notice and seeking an explanation becomes a mere formality. The Court inferred a total non-application of mind while passing the impugned order. The Court cited the Supreme Court decision in Oryx Fisheries Private Ltd. vs. Union of India & Ors. to emphasize the proper exercise of quasi-judicial functions. Consequently, the impugned order dated 29.10.2024 was set aside, and the matter was remanded to the author of the order for a fresh decision. The petitioner is to be provided a personal hearing, and notice shall be issued with seven days' time, after which written submissions will also be considered. This exercise is to be completed within four months.

Facts

The petitioner, Morlatis Engineering and Construction Private Limited, challenged an order dated 29.10.2024 passed by the Deputy Commissioner of State Tax, Samastipur (Respondent No. 2) under Section 74 of the Bihar Goods and Services Tax Act, 2017. The petitioner argued that the order for the tax period 2023-24 went beyond the scope of the show cause notice. Specifically, it imposed penalty and interest on the differential between input tax credit as per GSTR 2B and GSTR 3B, without considering the petitioner's written submissions and explanation regarding stock storage at the worksite for business convenience and cost reduction. The petitioner also contended that no material evidence was brought on record as mandated by a Central Board of Indirect Taxes circular, rendering the order without jurisdiction.

Key Issues

1. Whether the order dated 29.10.2024, passed by the Deputy Commissioner of State Tax under Section 74 of the Bihar Goods and Services Tax Act, 2017, is liable to be set aside and quashed for being beyond the terms of the show cause notice and for not considering the petitioner's written submissions and explanations. (Question of law and fact, turning on Section 74 of the BGST Act). Petitioner's arguments: The impugned order is bad in law as it travels beyond the show cause notice, imposes penalty and interest on a differential not contemplated, and fails to consider the detailed written submissions and explanations provided by the petitioner. The petitioner also argued that the order lacks material evidence and is therefore without jurisdiction, relying on a circular issued by the Central Board of Indirect Taxes. The petitioner further argued that the authority failed to apply its mind to the contentions raised. Revenue's arguments: The judgment records no specific arguments for the respondent.