2020 (9) TMI 678 - HC - GST

Refund of ITC - zero-rated supply - Section 54 of the CGST Act, 2017 - periods of July, August, September, October and November 2017 - HELD THAT - The respondent had, in a cryptic manner, rejected some of the proposals by stating that, as per Section 54 (8)(a), the ineligible goods or services are not directly used for making zero-rated supply. Apart from this, there is absolutely no other reasons adduced in the order. It is a settled proposition of law that whenever an application of this nature is made, the statutory authority are bound to consider the claim made and pass a reasoned order. In the present case, the petitioner had made an application for refund under Section 54 of the Act and when the respondent had issued notice to them for rejection of the ineligible goods and services of SGST, CGST and IGST, they have given a detailed reply, objecting to the notices - All these objections were required to be dealt with by the authority, before taking a final call, which is conspicuously absent. As such, the order itself can be termed to be a non speaking order and therefore, are liable to be set aside. The impugned orders are set aside and the matter is remanded back to the respondent for fresh consideration - Petition allowed by way of remand.

Summary

Issues:
Challenge to rejection of refund claims under Section 54 of the CGST Act, 2017 based on non-speaking orders.

Analysis:
The petitioner exported Knitwear and Knitted Fabric, seeking refund of Input Tax Credit (ITC) under Section 54 of the CGST Act, 2017 for the periods of July to November 2017, as zero-rated supplies. The rejection of the petitioner's claims through five orders was challenged in the Writ Petitions. The main contention raised was that the rejection orders lacked reasons for inadmissibility of the refund, rendering them non-speaking orders.

The Court noted that the rejection orders merely cited Section 54(8)(a) without providing detailed reasons for disallowing the refund. It emphasized that authorities must pass reasoned orders when considering refund applications. Despite the petitioner's objections to the notices issued by the respondent, those objections were not addressed before the final decision was made, making the orders non-speaking and subject to being set aside.

Consequently, the Court set aside the impugned orders and remanded the matter back to the respondent for fresh consideration. The petitioner was granted the opportunity to submit fresh objections within 15 days, which the respondent must consider along with providing a personal hearing. The respondent was directed to pass appropriate orders expeditiously, within 60 days of receiving the petitioner's objections, ensuring justice is served. All Writ Petitions were disposed of with no costs imposed.