2018 (1) TMI 1437 - HC - Customs

Principles of natural justice - refund claim - case of petitioner is that the petitioner had no opportunity to explain to the Authority, that their action was not justified - Held that - Since the partial rejection of the petitioner s claim for refund results in civil consequence, the principles of natural justice demands that the petitioner be afforded an opportunity. The explanation sought to be given by the respondent, in Para No. 10 of the counter affidavit cannot be countenanced, as the statute does not put a bar for an opportunity being granted, and if statute is silent, then, principles of natural justice has to be read into the statute, so that the assessee has reasonable opportunity to put forth this case. Petition disposed off.

Summary

Issues:
1. Rejection of refund claim by the impugned order.
2. Lack of opportunity for the petitioner to explain discrepancies.
3. Principles of natural justice and opportunity for the petitioner.

Analysis:
The High Court of Madras, in the judgment, addressed the issue of the rejection of the petitioner's refund claim by the impugned order-in-original. The petitioner contested the order, claiming a refund of &8377; 1,85,586, which was partially rejected without providing them with an opportunity to explain the discrepancies. The respondent, in their counter affidavit, cited the lack of correlation between the imported goods and the sale invoice as the reason for the rejection. However, the petitioner argued that they were not given a chance to justify their actions before the refund claim was partially rejected. The court emphasized the importance of principles of natural justice in such cases where civil consequences are involved. It ruled that the petitioner should be treated as if a show cause notice had been issued, allowing them to submit objections within 30 days and providing an opportunity for a personal hearing to present their case. The respondent was directed to consider the objections and determine if the petitioner was entitled to the refund within 60 days.

The judgment highlighted the significance of affording the petitioner a fair opportunity to explain their position before rejecting a refund claim, especially when civil consequences are at stake. It emphasized that even if the statute is silent on providing such an opportunity, principles of natural justice must be applied to ensure a reasonable chance for the assessee to present their case. By directing the petitioner to treat the impugned order as a show cause notice and allowing them to submit objections and have a personal hearing, the court upheld the principles of natural justice and fairness in the adjudication process. The judgment ultimately disposed of the writ petition without imposing any costs, indicating a resolution in favor of the petitioner's right to a fair hearing and consideration of their refund claim.