Patna High Court
M/S B.K. Warehousing Llp vs The State Of Bihar on 21 March, 2025
Author: Rajeev Ranjan Prasad
Bench: Rajeev Ranjan Prasad
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.8482 of 2024
======================================================
M/s B.K. Warehousing LLP, having its registered office at 4th Floor, Shop
No. 1 to 7. Khetan Super Market, Birla Mandir Road, Patna through its
Partner Sanjay Bhartiya, aged about 54 years (male), son of Late Din Dayal
Bhartiya, resident of Rambhagh Chowk, Jhauganj, Patna City, P.S.- Chowk,
District - Patna.
... ... Petitioner
Versus
1. The State of Bihar through the Commissioner of State Tax, Patna.
2. The Joint Commissioner of State Tax, Kadamkuan Circle, Patna.
3. The Assistant Commissioner of State Tax, Kadamkuan Circle, Patna.
... ... Respondents
======================================================
with
Civil Writ Jurisdiction Case No. 9107 of 2024
======================================================
M/s B.K. Warehousing LLP having its registered office at 4th Floor, Shop No.
1 to 7. Khetan Super Market, Birla Mandir Road, Patna through its Partner
Sanjay Bhartiya, aged about 54 years (male), son of Late Din Dayal Bhartiya,
resident of Rambhagh Chowk, Jhauganj, Patna City, P.S.- Chowk, District -
Patna.
... ... Petitioner
Versus
1. The State of Bihar through the Commissioner of State Tax, Patna.
2. The Joint Commissioner of State Tax, Kadamkuan Circle, Patna.
3. The Assistant Commissioner of State Tax, Kadamkuan Circle, Patna.
... ... Respondents
======================================================
with
Civil Writ Jurisdiction Case No. 9122 of 2024
======================================================
M/s B.K. Warehousing LLP having its registered office at 4th Floor, Shop No.
1 to 7, Khetan Super Market, Birla Mandir Road, Patna through its Partner
Sanjay Bhartiya, aged about 54 years (male), son of Late Din Dayal Bhartiya,
resident of Rambhagh Chowk, Jhauganj, Patna City, P.S. Chowk, District -
Patna
... ... Petitioner
Versus
1. The State of Bihar through the Commissioner of State Tax, Patna.
2. The Joint Commissioner of State Tax, Kadamkuan Circle, Patna.
3. The Assistant Commissioner of State Tax, Kadamkuan Circle, Patna.
... ... Respondents
======================================================
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
2/11
Appearance :
(In Civil Writ Jurisdiction Case No. 8482 of 2024)
For the Petitioner : Mr. Saket Tiwary, Advocate
Mr. Shivam Gupta, Advocate
Mr. Animesh Gupta, Advocate
Mr. Tarun, Advocate
For the Respondent/s : Mr. Vivek Prasad, GP-7
Ms. Roona, AC to GP-7
Mr. Sanjay Kumar, AC to GP-7
(In Civil Writ Jurisdiction Case No. 9107 of 2024)
For the Petitioner : Mr. Saket Tiwary, Advocate
Mr. Shivam Gupta, Advocate
Mr. Animesh Gupta, Advocate
Mr. Tarun, Advocate
For the Respondent/s : Mr. Standing Counsel (11)
(In Civil Writ Jurisdiction Case No. 9122 of 2024)
For the Petitioner : Mr. Saket Tiwary, Advocate
Mr. Shivam Gupta, Advocate
Mr. Animesh Gupta, Advocate
Mr. Tarun, Advocate
For the Respondent/s : Mr. Vivek Prasad, GP-7
Ms. Roona, AC to GP-7
Mr. Sanjay Kumar, AC to GP-7
======================================================
CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
and
HONOURABLE MR. JUSTICE SOURENDRA PANDEY
ORAL JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)
Date : 21-03-2025
Heard, Mr. Saket Tiwary, learned counsel for the
petitioner and Mr. Vivek Prasad, learned GP-7 for the State-
respondents.
2. The petitioner in this writ application is aggrieved by
and dissatisfied with the order dated 22.01.2024 (Annexure 'P1')
passed by the Assistant Commissioner of State Tax, Kadamkuan
Circle, Patna by which the petitioner has been directed to pay a
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
sum of Rs. 59,810/- holding that the petitioner was ineligible for
availing Input Tax Credit (ITC) for financial year 2021-2022.
3. The petitioner in this writ application is aggrieved by
and dissatisfied with the order dated 22.01.2024 (Annexure 'P1')
passed by Assistant Commissioner of State Tax, Kadamkuan
Circle, Patna by which the petitioner has been directed to pay the
sum of Rs.23,45,996/- holding that the petitioner was ineligible for
availing Input Tax Credit for financial year 2023-24 (April 2023 to
July 2023).
4. The petitioner in this writ application is aggrieved by
and dissatisfied with the order dated 24.01.2024 (Annexure 'P1')
passed by the Assistant Commissioner of State Tax, Kadamkuan
Circle, Patna by which the petitioner has been directed to pay a
sum of Rs.4,81,65,483.00/- holding that the petitioner was
ineligible for availing Input Tax Credit for the financial year 2022-
23 (April 2022 to March 2023).
Brief Facts of the Case
5. In all these writ applications, a common question has
arisen for consideration. The petitioner has constructed a warehouse
which is made of brick and mortar structure to some height and
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
thereafter, pre-fabricated structure, truss and iron shed/sheet etc. have
been used for building the warehouse.
6. The petitioner has let out the said warehouse and
received rent income from the lessees with whom the petitioner has
entered into a lease agreement.
7. It is the case of the petitioner that he has let out the
warehouse to the various companies dealing in consumable goods,
they are e-marketing companies and whatever income the petitioner
derives from rent would be liable to tax under the Bihar Goods and
Services Tax Act, 2017 (hereinafter referred to as the 'BGST Act,
2017') only after availing the Input Tax Credit. For the financial year
2021, the petitioner claimed an Input Tax Credit of Rs. 30,102/-.
8. The Department has, however, taken a view that the
warehouse is an immovable property (other than plant or machinery)
and relying upon Section 17(5)(d) of the BGST Act, 2017, the
Department has expressed its opinion that the petitioner cannot avail
ITC against the construction of the warehouse.
9. From the facts revealed on the record, it appears that the
petitioner was served with the show cause notice, copy of which has
been enclosed with the writ applications. The show cause notice
dated 04.11.2023 was replied by the petitioner in CWJC No. 8482
vide Annexure 'P3'. The petitioner claimed that he has availed the
ITC paid on purchase of civil construction materials as well as on
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
purchase of pre-fabricated structures fitted/ mounted upon the civil
structures so constructed and also against the equipment such as
crane, lifter, air-conditioners, generators and other electrical items
necessary for carrying out the warehouse activities.
10. It appears on reading of the impugned order (Annexure
'P1') that the Assistant Commissioner of State Tax has recorded that
the tax payer was given several opportunities to make submissions in
his favour. They were called upon to make available their defence but
when they failed to do so, the Assistant Commissioner examined
whatever papers were available on the record and found that the
warehouse has been constructed not for the use of the petitioner but
for renting it out. The judgment of the Hon'ble High Court of Orissa
in W.P. (C) No. 20463 of 2018 in the case of M/s Safari Retreats
Pvt. Ltd. and Another versus Chief Commissioner of Central
Goods & Service Tax & Others which perhaps favoured the
petitioner's contentions was also placed before the Assistant
Commissioner State Tax.
11. The Assistant Commissioner State Tax, however, took
a view that the judgment of the Hon'ble High Court of Orrisa has
brought no change in the statute as of now and the said judgment was
still under consideration in the Hon'ble Supreme Court of India.
What prevailed with the authorities is evident in paragraph '10' of the
impugned order where it is recorded that ".... The taxpayer failed to
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
submit any satisfactory documentary evidence supporting his claim.
Even after diligent perusal and despite Mr. Kumar's acquiescence of
permanently reversing ITC taken on inputs of civil construction
material and temporarily reversing ITC taken on inputs of pre-
fabricated construction material (mentioned and signed on record),
the taxpayer did not reverse the above said ITC. .....". The aforesaid
observations of the authority may be found in the impugned order
itself where it is recorded that the learned Advocate Mr. Kumar
Rahul appeared and after a wide discussion agreed to pay tax related
to ITC on civil structure and also agreed to temporarily reverse ITC
related to prefab structure by 15.01.2024.
Submissions on behalf of the Petitioner
12. Mr. Saket Tiwary, learned counsel for the petitioner
submits that the judgment of the Hon'ble High Court of Orrisa in the
case of M/s Safari Retreats Pvt. Ltd. & Anr. was pending
consideration before the Hon'ble Supreme Court of India, therefore,
in all fairness, equity and justice, the Assistant Commissioner, State
Taxes could have waited for a while for the judgment of the Hon'ble
Supreme Court but that was not done and the impugned order has
been passed in haste. It is his submission that the judgment of the
Hon'ble Orrisa High Court which was placed before the said
authority has not at all been looked into and the impugned order has
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
been passed on the solitary ground that the representative of the
petitioner had earlier acquiesced to the part of the demand.
13. By placing a copy of the judgment of the Hon'ble
Supreme Court in the case of Chief Commissioner of Central
Goods and Service Tax & Ors. vs. M/s Safari Retreats Private
Ltd. & Ors. reported in [2024] 131 GSTR 184 (SC), learned
counsel has drawn the attention of this Court towards paragraphs
'64', '65' and '67'.
14. It is his submission that the Hon'ble Supreme Court
has in unequivocal words expressed its opinion that whether a
warehouse can be classified as plant within the meaning of the
expression "plant or machinery" used in Section 17(5)(d) is a factual
question which has to be determined keeping in mind the business of
the registered person and the role that the building plays in the said
business. It is submitted that had the judgment of the Hon'ble
Supreme Court been waited for a while, the Assistant Commissioner
State Tax would have the benefit of appreciating the factual aspects
of the matter and he would have been in a better position to express
his opinion on the issue involved.
Submissions on behalf of the State
15. The writ applications have been contested by Mr.
Vivek Prasad, learned GP-7 for the State. It is submitted that several
opportunities were granted to the petitioner to produce satisfactory
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
documentary evidence in support of his claim but the petitioner failed
to produce any satisfactory documentary evidence. It is further
submitted that Mr. Kumar Rahul who had appeared on behalf of the
petitioner had agreed to permanently reverse the ITC taken on inputs
on civil construction material and temporarily reversing the ITC
taken on inputs of pre-fabricated construction material. It is pointed
out that the impugned orders mention the same as "mentioned and
signed on record". In such circumstances, it is submitted that the
petitioner should have acted in terms of the concession/assurance
given by the representative of the petitioner before the said authority.
Learned GP-7, therefore, submits that no interference is required by
this Court with the impugned orders.
Consideration
16. Having heard learned counsel for the petitioner and
learned GP-7 for the State as also on going through the judgment
of the Hon'ble Supreme Court in the case of M/s Safari Retreats
Pvt. Ltd. (supra), we are of the considered opinion that the
Assistant Commissioner State Tax, having noticed that what was
submitted by Mr. Kumar Rahul, the representative of the petitioner
by way of a concession, has not been acted upon and he has not
turned up to show compliance with his concession, was obliged to
take a view on the merit of the case by going into the factual
question as to whether the warehouse in this case may be classified
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
as a plant within the meaning of the expression "plant or
machinery" used in Section 17 (5)(d) of the BGST Act, 2017.
Paragraph '64', '65' and '67' of the judgment in M/s
Safari Retreats Pvt. Ltd. (supra) are being re-produced as under:-
"64. As we are upholding the constitutional
validity of clauses (c) and (d) of Section 17(5),
and as held earlier, its plain interpretation does
not lead to any ambiguity, the question of reading
down the provisions does not arise."
"65. Some of our conclusions can be summarised
as under:
(a) The challenge to the constitutional validity of
clauses (c) and (d) of Section 17(5) and Section
16(4) of the CGST Act is not established;
(b) The expression "plant or machinery" used in
Section 17(5)(d) cannot be given the same
meaning as the expression "plant and machinery"
defined by the Explanation to Section 17;
(c) The question whether a mall, warehouse or
any building other than a hotel or a cinema
theatre can be classified as a plant within the
meaning of the expression "plant or machinery"
used in Section 17(5)(d) is a factual question
which has to be determined keeping in mind the
business of the registered person and the role that
building plays in the said business. If the
construction of a building was essential for
carrying out the activity of supplying services,
such as renting or giving on lease or other
transactions in respect of the building or a part
thereof, which are covered by clauses 2 and 5 of
Schedule II of the CGST Act, the building could
be held to be a plant. Then, it is taken out of the
exception carved out by clause (d) of Section
17(5) to sub-section (1) of Section 16.
Functionality test will have to be applied to
decide whether a building is a plant. Therefore,
by using the functionality test, in each case, on
facts, in the light of what we have held earlier, it
will have to be decided whether the construction
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
of an immovable property is a "plant" for the
purposes of clause (d) of Section 17(5)."
"67. While deciding these cases, we cannot make
any final adjudication on the question of whether
the construction of immovable property carried
out by the petitioners in writ petitions amounts to
plant, and each case will have to be decided on its
merit by applying the functionality test in terms
of this judgment. The issue must be decided in
appropriate proceedings in which adjudication
can be made on facts. The petitioners are free to
adopt appropriate proceedings or raise the issue in
appropriate proceedings."
17. We find that the Assistant Commissioner State Tax
has not gone into that factual aspect of the matter. The mandate of
the judgment of the Hon'ble Supreme Court in the case of M/s
Safari Retreats Pvt. Ltd. (supra) as contained in paragraph 65(c)
would be equally applicable in the present case and the question as
to whether the warehouse would come within the meaning of
"plant or machinery" is required to be considered by the Assistant
Commissioner State Tax in the factual position of this case.
18. We, therefore, set aside the impugned orders as
contained in Annexure 'P1' in all the three writ applications.
19. The petitioner shall appear before the Assistant
Commissioner State Tax by 7th April, 2025 and submit all such
documentary evidences on which petitioner would like to rely
upon to address its stand. The Assistant Commissioner State Tax
shall provide an appropriate opportunity of hearing to the
Patna High Court CWJC No.8482 of 2024 dt.21-03-2025
petitioner and shall pass a fresh reasoned order within a period of
three months thereafter.
20. These writ applications are allowed to the extent
indicated hereinabove.
(Rajeev Ranjan Prasad, J)
( Sourendra Pandey, J)
SUSHMA2/-
Siddharth
AFR/NAFR
CAV DATE
Uploading Date 24.03.2025
Transmission Date
