2019 (9) TMI 1573 - HC - GST

Refund of GST - Scheme of Budgetary Support - partial rejection of the claim of the petitioner without assigning any reason and also without affording any opportunity of hearing - principles of natural justice - HELD THAT - It cannot be disputed that the principles of natural justice are required to be followed unless specifically barred. Rules of natural justices are not always part of the statute or the rules framed there under. Many a times they are to be read into it considering the nature of duties to be performed. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice - In the case in hand the scheme does not bar application of the principles of natural justice. It provides that whenever application is filed on examination thereof the competent authority shall sanction the reimbursement. Of course there is no need to grant any opportunity of hearing if the claim made in the application is to be accepted. However opportunity of hearing would become necessary in case any part of the claim is sought to be rejected. Alternative remedy of appeal - HELD THAT - The argument is contrary to the Circular No. 1068/1/2019-CX dated 10.01.2019 issued by Government of India Ministry of Finance Department of Revenue which clearly provides that there is no remedy of appeal under the Scheme. This Court is not examining this issue as such at this stage as the aforesaid circular is not binding to the Court. Further if there is violation of principles of natural justice the writ can always be entertained considering the facts and circumstances of the case. The contention raised by learned counsel for the petitioner that even if the opportunity of hearing is afforded to the petitioner the consequences will remain the same - HELD THAT - This Court would not like to examine the factual aspects of the case with all the calculations to find out as to what extent the petitioner would be entitled to reimbursement. There is a complete procedure provided in detail with percentage to determine the amount to which an applicant may be entitled to the reimbursement. Let that matter be examined by the authority first after affording an opportunity of hearing to the petitioner. Order impugned passed by the respondent No. 2 is set aside as far as it relates to rejection of the amount of reimbursement claimed by the petitioner with a direction to respondent No. 2 to adjudicate the claim of the petitioner after affording opportunity of hearing to the petitioner - Petition allowed.

Summary

Issues Involved:
1. Challenge to the rejection of tax refund under the Scheme of Budgetary Support.
2. Availability of alternative remedy of appeal against the impugned order.
3. Violation of principles of natural justice in the absence of opportunity of hearing.
4. Interpretation of the Scheme provisions and the absence of appeal remedy.
5. Calculation complexities and the need for expert resolution in tax matters.

Issue 1: Challenge to Tax Refund Rejection:
The petitioner, a Public Limited Company, challenged the partial rejection of its tax refund claim under the Scheme of Budgetary Support. The order by the Assistant Commissioner, CGST Division, Jammu, rejected a portion of the claimed refund without providing any reason or opportunity for hearing. The petitioner contended that it complied with the Scheme requirements and could have clarified any doubts if given a hearing. The respondent argued for the availability of an appeal remedy under the CGST Act, which the petitioner did not pursue. The Court analyzed the petitioner's entitlement under the Scheme and the rejection basis, ultimately setting aside the rejection and directing a reevaluation with a hearing opportunity.

Issue 2: Availability of Alternative Appeal Remedy:
The respondent contended that the petitioner had an alternative remedy of appeal under the CGST Act against the order, but the petitioner argued that the Scheme did not provide for an appeal. The Court noted the absence of appeal provision in the Scheme and referred to a relevant circular. It held that the lack of appeal provision did not bar the writ jurisdiction, especially in cases involving a violation of natural justice principles.

Issue 3: Violation of Principles of Natural Justice:
The Court emphasized the importance of natural justice principles in administrative orders with civil consequences. It noted that while the Scheme did not explicitly require a hearing for all claims, it should afford an opportunity if any part of the claim is to be rejected. Citing relevant judgments, the Court found that the rejection without a hearing violated natural justice principles, leading to the setting aside of the order for reevaluation with a hearing opportunity.

Issue 4: Interpretation of Scheme Provisions and Appeal Absence:
The Court discussed the interpretation of the Scheme provisions and the absence of an appeal remedy. It highlighted the need for a hearing if any part of the claim is to be rejected, ensuring a fair process and potentially avoiding prolonged litigation. The Court suggested that a remedy of appeal could be beneficial for resolving factual issues by tax experts before legal matters reach the Courts.

Issue 5: Calculation Complexities and Expert Resolution:
Acknowledging the complexities in tax calculations and the expertise required for resolution, the Court recommended the competent authority and the Government consider providing an appeal remedy against designated authority orders. It rejected the argument that granting hearings in all cases would be burdensome, emphasizing the importance of affording parties the right to be heard in determining their rights.

This detailed analysis of the judgment addresses the various issues involved, including the challenge to the tax refund rejection, the availability of alternative remedies, the violation of natural justice principles, the interpretation of Scheme provisions, and the complexities in tax calculations requiring expert resolution.