Assessment under Section 73: estimation without technical yardsticks invalid; reassessment required after reconciliation and hearing.

Challenge concerns whether an assessment under the Bihar GST scheme quantified tax, interest and penalty by estimating supplies from coal purchases without applying accepted technical yardsticks (for example coal per tonne of bricks) or reconciling invoices, e-way bills and production figures, and without proper procedural safeguards including adequate notice and opportunity to explain. The article concludes that the impugned exercise lacked technical correlation and fair hearing; it recommends setting aside the assessment and directing a fresh reassessment that applies technical criteria, reconciles documentary records and affords an adequate hearing.

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Issues: Whether the order passed under Section 73 of the Bihar Goods and Services Tax Act, 2017 quantifying tax, interest and penalty for the tax period 2021-22 on the basis of an estimate of sales from coal purchases without applying appropriate technical yardsticks and without adequate procedural safeguards including notice under Section 75(4) and fair hearing is legally sustainable.

Analysis: The assessment proceeded by estimating supply on the basis of coal purchases without correlating coal consumption with brick production using accepted technical yardsticks (for example, coal required per tonne of bricks). No contemporaneous exercise was undertaken to reconcile tax invoices, e-way bills and declared purchases with production figures to determine the correct quantum of coal consumption. The order under challenge did not demonstrate application of such technical criteria nor did it show that the respondents applied judicial mind to the petitioner's written explanations. Procedural safeguards required by the statutory scheme, including appropriate notice and provision of adequate opportunity to explain the factual and technical aspects, were not reflected in the impugned exercise. Given these defects, a fresh assessment directed to be undertaken with due consideration of technical evidence and after affording the petitioner adequate hearing is warranted.

Conclusion: The impugned order under Section 73 of the Bihar Goods and Services Tax Act, 2017 and the summary in Form GST DRC-07 are set aside and respondents are directed to re-examine and proceed afresh strictly in accordance with technical criteria and after providing adequate opportunity of hearing; writ petition allowed in favour of the assessee.

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