Quality Enviro Engineers Limited (Erstwhile M/S Quality Enviro Engineers Private Limited) vs. State Of Bihar

Facts

The petitioner, Quality Enviro Engineers Limited, a registered dealer in Uttar Pradesh and Bihar, challenged orders passed by the adjudicating authority under Section 74(9) of the BGST & CGST Act and the appellate authority. The tax period in question is 2020-21. The petitioner supplied goods to Narkatiaganj Nagar Parishad and Benipur Nagar Parishad. The Narkatiaganj Nagar Parishad mistakenly deducted TDS and deposited it under the petitioner's Bihar GSTIN. This led to the assessment proceedings against the petitioner. The petitioner argued that the place of supply was Uttar Pradesh, and tax liability was discharged there. The Narkatiaganj Nagar Parishad acknowledged the mistake in TDS deduction and deposit, stating a correction has been made. For supplies to Benipur Nagar Parishad, a remand was suggested.

Held

The Court set aside the order of assessment passed by the adjudicating authority dated 16.11.2021 and the order of the appellate authority dated 04.06.2024. The matter was remanded back to the adjudicating authority to pass a fresh order in accordance with law. The adjudicating authority was directed to take into consideration the rectification/correction made by Narkatiaganj Nagar Parishad regarding the TDS deposit and also to consider the supplies made by the petitioner to Benipur Nagar Parishad. A fresh reasoned order was to be passed after giving the petitioner an opportunity of hearing. The petitioner was given liberty to appear before the adjudicating authority within one month, and the adjudicating authority was directed to pass a final order within three months from the petitioner's appearance. Any consequential orders were also treated as quashed.

Key Issues

1. Whether the proceedings initiated under Section 74 of the BGST & CGST Act were justified in the absence of material to show fraud or misrepresentation by the petitioner, concerning the tax period 2020-21? Petitioner's arguments: The petitioner contended that the proceedings under Section 74 were not in accordance with the statute and Supreme Court pronouncements, as there was no evidence of fraud or misrepresentation. The petitioner argued that the place of supply was Uttar Pradesh, and tax liability was discharged there. The TDS deduction by Narkatiaganj Nagar Parishad was a mistake, which formed the basis of the assessment. Revenue/State's arguments: The Revenue/State did not explicitly argue against the petitioner's contention regarding the absence of fraud. However, the Narkatiaganj Nagar Parishad, a respondent, admitted to the mistake in TDS deduction and deposit, which led to the assessment. They also suggested a remand for the supplies made to Benipur Nagar Parishad.