Morlatis Engineering And Construction Private Limited vs. State Of Bihar

Held

The Court held that the impugned order dated 29.10.2024 suffered from a total non-application of mind. It was observed that the author of the order, exercising quasi-judicial functions, has a bounden duty to consider each and every contention raised by the assessee in response to the show cause notice. Failure to do so would render the process of issuing a show cause notice and seeking explanation an empty formality. The Court relied on the Supreme Court's decision in Oryx Fisheries Private Ltd. vs. Union of India & Ors. to emphasize the proper exercise of quasi-judicial functions. Consequently, the impugned order was set aside. The matter was remanded to the original authority for a fresh decision, with a direction to provide the petitioner with a personal hearing and to consider their written submissions after issuing a seven-day notice. The entire exercise was to be completed within four months from the date of the order.

Facts

Morlatis Engineering and Construction Private Limited (the petitioner) filed a writ petition challenging an order dated 29.10.2024 passed by the Dy. Commissioner of State Tax, Samastipur (respondent no. 2). The order was issued under Section 74 of the Bihar Goods and Services Tax Act, 2017, for the tax period April 2024 to July 2024. The petitioner contended that the order went beyond the scope of the show cause notice. The impugned order was based on the reversal of input tax credit by the supplier and the disallowance of input tax credit due to no stock found on inspection, without considering the petitioner's written submissions and explanations regarding stock storage at worksites. The petitioner argued that no material evidence was brought on record to justify proceedings under Section 74 on grounds of suppression of facts.

Key Issues

1. Whether the impugned order dated 29.10.2024, passed by the Dy. Commissioner of State Tax under Section 74 of the Bihar Goods and Services Tax Act, 2017, is liable to be set aside for exceeding the terms of the show cause notice and for non-application of mind? Petitioner's Arguments: The petitioner argued that the impugned order was passed beyond the terms of the show cause notice. Specifically, it was contended that the order relied on the reversal of input tax credit by the supplier and the disallowance of input tax credit due to no stock found on inspection, without adequately considering the petitioner's written submissions and explanations. The petitioner asserted that the authorities failed to bring on record any material evidence to justify proceeding under Section 74 on grounds of suppression of facts, as mandated by relevant circulars. The petitioner also argued that the author of the order, exercising quasi-judicial functions, failed to consider each contention raised in response to the show cause notice, rendering the process a mere formality. Revenue's Arguments: The judgment does not record any specific arguments made by the respondent revenue.