2018 (12) TMI 1405 - HC - GST

Refund of integrated tax paid - opportunity of personal hearing not provided - principles of natural justice - Held that - It is evident that the respondent has chosen to pass the impugned order not only by ignoring the reply submitted by the petitioner dated July 13, 2018, filed in response to the deficiency memo dated July 4, 2018 and also in violation of the principles of natural justice, as admittedly the petitioner was not afforded with the personal hearing, even though such request was specifically made by the petitioner through their reply dated July 13, 2018. The respondent has chosen to reiterate the deficiencies already pointed out in the deficiency memo, as the reason for rejecting the refund application, without considering the explanation given by the petitioner, as to how such deficiencies pointed out by the respondent are either improper or not warranted. Therefore, this court is of the view that the respondent should consider the application already filed by the petitioner once again on merits. Appeal allowed by way of remand.

Summary

Issues:
1. Rejection of refund claim by the respondent without considering petitioner's reply and without affording a personal hearing.
2. Violation of principles of natural justice in passing the impugned order.

Analysis:
The petitioner sought a refund of integrated tax amounting to ?75,67,642 based on grounds presented in their refund application. The respondent issued a deficiency memo on July 4, 2018, highlighting certain deficiencies and advised the petitioner to file a fresh refund application after rectification. The petitioner responded on July 13, 2018, refuting the deficiencies and requesting the respondent to consider their application, also asking for a personal hearing if needed. However, the respondent passed the impugned order without acknowledging the petitioner's reply or providing a personal hearing, reiterating the reasons stated in the deficiency memo.

The petitioner's counsel argued that the respondent unjustly ignored the petitioner's explanations in the reply and failed to grant a personal hearing despite the request. On the contrary, the respondent's counsel contended that a fresh refund application should have been filed after the deficiencies were pointed out, although admitting that no personal hearing was conducted, deeming it unnecessary in the circumstances.

After hearing both sides, the court refrained from expressing a view on the refund claim's merits, emphasizing it was the respondent's prerogative to decide. The court found that the impugned order disregarded the petitioner's reply, violated natural justice principles by not providing a personal hearing, and merely reiterated the deficiencies without considering the petitioner's explanations. Consequently, the court allowed the writ petition, set aside the impugned order, and directed the respondent to reconsider the application based on the petitioner's reply and after affording a personal hearing. The respondent was instructed to complete this process within six weeks from the date of the court's order, with no costs imposed.