Patna High Court
Rounak Int UdyogversusState of Bihar
- Decided
- Disposal
- ALLOWED
Holding
An assessment order passed under Section 73 without prior notice and based solely on estimation violates statutory procedure and natural justice, and must be quashed with a fresh assessment ordered.
Summary
The Patna High Court entertained a writ petition filed by Rounak Int Udyog challenging a demand order dated 06‑12‑2023 issued under Section 73 of the Bihar Goods and Services Tax Act, 2017. The petitioner alleged that the assessment was made solely on the basis of an estimated sale derived from coal purchases, without any notice under Section 75(4), without considering the GST returns, and in violation of natural justice. Relying on a prior judgment (CWJC No.7580 of 2025) where a similar order was set aside for lack of proper estimation, the court examined whether the authority had complied with statutory procedural requirements. The court held that the ex‑parte demand order was ultra vires as it ignored the notice requirement and was based on guesswork, thereby breaching the principles of natural justice. Consequently, the order and the accompanying GST DRC‑07 summary were quashed, and the respondents were directed to conduct a fresh assessment with an adequate hearing within six months. The writ petition was allowed.
Issues considered
- Whether an assessment order under Section 73 of the Bihar GST Act can be passed on the basis of estimation without prior notice under Section 75(4).
- Whether the failure to consider the taxpayer's GST returns and to afford a hearing violates the principles of natural justice.
- Whether the summary order in Form GST DRC‑07 quantifying tax, interest and penalty can be set aside.
- Whether the precedent set in Rounak Int Udyog vs. State of Bihar (CWJC No.7580 of 2025) is applicable to the present case.
Subjects
- GST
- assessment
- estimation
- natural justice
- notice requirement
- penalty
- tax demand order
- Bihar
- civil writ jurisdiction
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.7679 of 2025
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Rounak Int Udyog a proprietorship concern having its office at Rampur,
Basopatti, Madhubani, Bihar-847225 through its proprietor Shambhu Singh
(Male, aged about 40 years) son of Shri Shyam Nandan Singh, resident of H.
No. 123, Ward No. 14, Pachhwari Tola, Near School, Chatauni, Madhubani,
Bihar-847225.
... ... Petitioner/s
Versus
1. State of Bihar through the Commissioner of State Tax, Bihar, Patna having
its office at Vikas Bhawan, Patna-800001.
2. Asst. Commissioner of State Tax, Madhubani, Darbhanga, Bihar.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr. D.V.Pathy, Sr. Adv.
Mr.Sadashiv Tiwari, Adv.
Ms. Shivani Dewalla, Adv.
For the Respondent/s : Mr.Standing Counsel (11)
======================================================
CORAM: HONOURABLE MR. JUSTICE MOHIT KUMAR SHAH
and
HONOURABLE MR. JUSTICE ARUN KUMAR JHA
ORAL ORDER
(Per: HONOURABLE MR. JUSTICE MOHIT KUMAR SHAH)
3 15-04-2026 The present writ petition has been filed seeking the
following reliefs:-
“1(i). The order dated 06.12.2023 (as contained in
Annexure -P3 series) passed by the respondent no. 2 for
the Tax Period 2022 -23 under Section 73 of the Bihar
Goods and Services Tax Act, 2017 (hereinafter called the
Act) merely on the basis of estimation of sale on the
basis of purchase of coal without taking notice of the tax
invoice and the corresponding purchases shown in the
GST returns in absence of any statutory provision
enabling such estimate on mere guesswork in absence of
Patna High Court CWJC No.7679 of 2025(3) dt.15-04-2026
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a supply of goods being in contravention of section 7 and
9 of the Act that too without issue of notice under Section
75 (4) of the Act before passing an adverse order and
also in view the content of the show cause notice, the
subsequent notice and the order being the same without
consideration of the written explanation/submission and
also without application of judicial mind and also being
counter to the settled principles of natural justice is
wholly illegal and without jurisdiction?
(ii). the summary of the order in Form GST DRC - 07 (as
contained in Annexure -P3 series) quantifying the
demand of tax, interest and penalty for the Tax Period
2022-23 be set aside and quashed.”
2. At the outset, the learned counsel for the parties have
relied upon a judgment dated 30.08.2025, passed in the case of
Rounak Int Udyog vs. the State of Bihar (CWJC No.7580 of
2025), the operative portion whereof is reproduced
hereinbelow:-
“2. Perusal of the records, it is evident that Respondents
before levying tax, interest, penalty insofar as
consumption of coal to produce bricks, no yardstick has
been taken note of to the extent what would be the
quantum of coal read with the production of bricks so as
to draw inference that petitioner had manipulated while
generating Invoice read with e-Way bill. For example for
production of one ton of bricks, the quantity of coal
required typically ranges from 100 to 250 kilograms,
proportionately production of bricks and purchase of
coal are to be read with relevant papers. This exercise
has not been under taken by the Respondents. In the light
of these facts and circumstances, the petitioner has made
out a case so as to interfere with the impugned decision
of the Respondent. Accordingly, it is set aside.
3. Respondents are hereby directed to take out fresh
Patna High Court CWJC No.7679 of 2025(3) dt.15-04-2026
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necessary steps strictly in accordance with the technical
issue and also providing ample opportunity of hearing to
the petitioner. The above exercise shall be completed
within a period of six months from the date of receipt of
this order. Petitioner shall cooperate with the concerned
official Respondents.”
3. The learned counsel for the respondent-State submits that in
view of the aforesaid judgment passed in the case of Rounka
Int Udyog (supra), he has got no objection in case the matter is
remanded back to the appropriate authority.
4. Having regards to the facts and circumstances of the case, the
impugned ex-parte Demand Order bearing Reference No.
ZD101223005978N dated 6.12.2023 along with the summary
order in form GST DRC-07 dated 6.12.2023 for the F.Y.-2022-
23 (Annexure P-3 series), issued by the Assistant Commissioner
of State Tax, Madhubani:Darbhanga:Bihar are quashed. The
respondents are hereby directed to undertake fresh steps strictly
in accordance with the provisions contained under the Bihar
Goods and Services Tax Act, 2017 and after providing an
adequate opportunity of hearing to the petitioner, the final order
shall be passed. Such exercise shall be completed within a
period of six months from the date of receipt/production of a
copy of this order.
5. It is needless to state that in case the petitioner does not co-
Patna High Court CWJC No.7679 of 2025(3) dt.15-04-2026
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operate with the concerned officials, the respondents shall be
free to proceed ex parte.
6. The writ petition stands allowed.
(Mohit Kumar Shah, J)
( Arun Kumar Jha, J)
Ajay/-
U
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