2021 (4) TMI 471 - Commissioner - GST

Rejection of refund claim - rejection on the ground that appellant did not submit any explanation regarding mismatch in ITC - opportunity of hearing provided to the Appellant - HELD THAT - Before passing the said order adjudicating authority had issued show cause notice in Form RFD-08, dated 8-4-2020 reason stated therein that it appears refund application is liable to be rejected on account of mismatch of ITC amount ₹ 6,04,638/- and it was directed to appellant to furnish a reply to this notice within 15 days from the date of service of this notice and also directed to appear before adjudicating authority on 23-4-2000. The appellant has taken the main plea in their ground of appeal that adjudicating authority has rejected the refund claim without providing the opportunity of personal hearing in the instant matter and thus has violated the principle of natural justice. Moreover, the appellant has emphasized the various reasons for mismatch of ITC between GSTR-3B and GSTR-2A and stated that he is entitled for the refund of ₹ 6,04,638/- in terms of Circular No. 139/09/2020-GST, dated 10-6-2020, which has not been considered by the adjudicating authority - the appellant did not get the proper opportunity to submit their reply/submission in their contention before the adjudicating authority. The reason of non-submission of reply and not appearing for personal hearing before the adjudicating authority is acceptable in terms of Notification No. 35/2020-Central Tax, dated 3-4-2020. As per the notification the time limit for filing of reply by taxpayers was extended upto 30-8-2020 due to COVID-19 spread - An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. The adjudicating authority while rejecting the refund claim of the appellant neither considered their request nor their first request for seeking adjournment of personal hearing due to COVID-19 lockdown in terms of Notification No. 35/2020-Central Tax, dated 3-4-2020 - the passing of non-speaking order indeed amount to denial of natural justice - case remanded back to the adjudicating authority for decide the case afresh by following the principle of natural justice and for passing the speaking order - appeal allowed by way of remand.

Summary

Issues Involved:
1. Violation of the principle of natural justice by not providing an opportunity of hearing.
2. Non-consideration of Notification No. 35/2020-Central Tax, dated 3-4-2020.
3. Entitlement of the appellant to the refund of ?6,04,638.

Detailed Analysis:

1. Violation of the Principle of Natural Justice:
The appellant contended that the adjudicating authority rejected the refund claim without providing an opportunity for personal hearing, thus violating the principle of natural justice. Section 75(4) of the CGST Act mandates that an opportunity of hearing must be granted where any adverse decision is anticipated. Rule 92 of the CGST Rules also stipulates that no application for refund shall be rejected without giving the applicant an opportunity of being heard. The adjudicating authority failed to provide such an opportunity, especially given the appellant's request for an extension due to the COVID-19 lockdown.

2. Non-Consideration of Notification No. 35/2020-Central Tax:
The appellant argued that the adjudicating authority did not consider the extension of time limits provided by Notification No. 35/2020-Central Tax, which extended the deadline for filing replies and issuing orders to 31-8-2020 due to the COVID-19 pandemic. Despite this extension, the adjudicating authority hastily passed the impugned order without granting the appellant the extended time to file a reply.

3. Entitlement to Refund of ?6,04,638:
The appellant claimed entitlement to the refund of ?6,04,638 under Section 54(3)(b) of the CGST Act, which allows for the refund of unutilized input tax credit (ITC) due to an inverted tax structure. The adjudicating authority rejected the refund on the grounds of a mismatch in ITC between Form GSTR-3B and Form GSTR-2A. The appellant explained that such mismatches could occur due to ITC on imports, ISD supplies, and RCM supplies, which are not reflected in Form GSTR-2A but are included in Form GSTR-3B. Circular No. 139/09/2020-GST supports the appellant's claim by stating that refunds should be granted even if such details are not reflected in Form GSTR-2A.

Judgment:
The appellate authority found that the adjudicating authority did not provide the appellant with a fair opportunity to submit their reply or appear for a personal hearing, violating the principle of natural justice. The adjudicating authority also failed to consider the extension of time limits provided by Notification No. 35/2020-Central Tax. Furthermore, the adjudicating authority did not adequately address the mismatch in ITC in a detailed, speaking order.

The case was remanded back to the adjudicating authority to be decided afresh, ensuring the principles of natural justice are followed and a speaking order is passed. The appellant was directed to submit all relevant documents and submissions before the adjudicating authority.

Conclusion:
The appeal was disposed of by remanding the case back to the adjudicating authority for a fresh decision, adhering to the principles of natural justice and considering the appellant's submissions comprehensively.