MicroRNAs (miRNAs) are small non-coding RNAs that function as regulators of gene expression. In recent years, there has been a tremendous interest among researchers to investigate the role of miRNAs in normal as well as in disease processes. To investigate the role of miRNAs in oral cancer, we analyse expression levels of miRNAs to identify miRNAs with statistically significant differential expression in cancer tissues. In this article, we propose a novel Bayesian hierarchical model of miRNA expression data. Compelling evidence has demonstrated that the transcription process of miRNAs in the human genome is a latent process instrumental for the observed expression levels. We take into account positional clustering of the miRNAs in the analysis and model the latent transcription phenomenon nonparametrically by an appropriate Gaussian process. For the purpose of testing, we employ a novel Bayesian multiple testing method where we mainly focus on utilizing the dependence structure between the hypotheses for better results, while also ensuring optimality in many respects. Indeed, our non-marginal method yielded results in accordance with the underlying scientific knowledge which are found to be missed by the very popular Benjamini-Hochberg method.