No Technical Yardstick applied while issuing S. 73 Order against Brick Manufacturer: Patna HC Directs for Fresh Assessment [Read Order]
The Court noted that no technical assessment was undertaken to determine the quantum of coal actually required for brick production, thus directed to pass fresh assessment within 6 months.
Brick - manufacturer - Taxscan
Brick - manufacturer - Taxscan
The Patna High Court has quashed a demand order issued under Section 73 of the Bihar Goods and Services Tax Act, 2017 ( BGST Act ) against a brick manufacturer, holding that the assessment was carried out without any technical yardstick.
The petitioner, Rounak Int Udyog is a proprietorship firm engaged in brick manufacturing, challenged the order dated 6 December 2023, whereby the Assistant Commissioner of State Tax, Madhubani, raised demand for FY 2021-22 based solely on an estimation of coal consumption vis-à-vis brick production.
The Department assumed suppressed sales on the basis of coal purchases, without correlating the same with tax invoices, GST returns, or established industry standards.
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A Division Bench comprising Justice P. B. Bajanthri and Justice G. Anupama Chakravarthy found that the department had ignored essential factors while invoking Section 73.
The Court noted that no technical assessment was undertaken to determine the quantum of coal actually required for brick production. Typically, 100-250 kilograms of coal is needed per ton of bricks, but the Department failed to apply this standard or corroborate its estimation with records, invoices, or e-way bills, said the bench.
Further, the petitioner claimed that the demand was raised without complying with Section 75(4) of the BGST Act, which mandates issuance of notice and granting of an opportunity of hearing before passing an adverse order. The show-cause notice, subsequent notice, and final order were found to be identical, lacking independent reasoning and reflecting non-application of mind. However, the court has not made any express observation on that, nor rejected it.
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Accordingly, the Court set aside the impugned order and the corresponding summary. It directed the Department to undertake a fresh reassessment in accordance with technical criteria and to grant the petitioner adequate hearing.
The bench clearly instructed to complete the entire exercise within six months from receipt of the Court’s order, with full cooperation from the petitioner. Accordingly, the petition was allowed.
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