2021 (4) TMI 1177 - Commissioner - GST

Refund of GST - rejection of ITC debited relating to export of goods without payment of duty - rejected on the ground that appellant have not submitted the supporting documents in respect of the refunds filed under Rule 92(3) of CGST Rules, 2017 and Circular No.79/53/2018- GST dated 31.12.2018 - HELD THAT - There are force in the appellant s plea that the said impugned order was passed without issue of deficiency memo in GST Form -03 and also without issue of RFD-08 without being heard to him. Further, it is also provided in Rule 92(3) of CGST Rules, 2017 that no application for refund shall be rejected without giving the applicant an opportunity of being heard - the adjudicating authority while rejecting the refund claims of the appellant neither deficiency memo in Form GST RFD-03 nor show cause notice in Form RFD-08 has been issued and also any relevant provisions of law/rules for rejection of their refund claims has been discussed. It is also found that non-passing of speaking order indeed amount to denial of natural justice. Before passing of order atleast deficiency memo and show cause notice and at least speaking order should have been passed by giving proper opportunity of personal hearing in the matter to the appellant and detailing factors leading to rejection of refund claims. Such order is not sustainable in the eyes of law - In view of the above legal provisions provided in CGST Act and Rules made thereunder it would be appropriate at the part of adjudicating authority to provide the proper opportunity of being heard to the appellant and pass of fresh speaking order accordingly impugned order is set aside - appeal allowed by way of remand.

Summary

Issues:
1. Rejection of refund claims due to non-submission of supporting documents.
2. Lack of issuance of deficiency memo and show cause notice before rejecting the refund claims.
3. Violation of natural justice principles in the rejection of refund claims.

Analysis:

Issue 1: Rejection of refund claims due to non-submission of supporting documents
The appellant, engaged in the manufacture of goods falling under a specific GST tariff, exported goods to UAE/USA and filed refund claims for tax paid on raw materials. The adjudicating authority rejected the refund claims citing non-submission of supporting documents despite requests and reminders. The appellant contended that they had uploaded all supporting documents while filing the refund claims, emphasizing that the rejection was unjustified.

Issue 2: Lack of issuance of deficiency memo and show cause notice
The appellant raised concerns about the lack of issuance of a deficiency memo and show cause notice before rejecting the refund claims, as mandated by Rule 90 and Rule 92 of the CGST Rules 2017. The appellant argued that the rejection order was passed without following due procedure, violating the principles of natural justice. The absence of a formal communication process and personal hearing before rejection was highlighted as a procedural flaw.

Issue 3: Violation of natural justice principles
During the personal hearing, the appellant reiterated the grounds of appeal, emphasizing the failure of the adjudicating authority to issue a deficiency memo or show cause notice. The appellant stressed that no communication was received regarding deficiencies in the refund claims, and no opportunity for rectification was provided. The appellate authority found merit in the appellant's arguments, noting that the rejection order lacked a proper explanation and violated the principles of natural justice.

In the final decision, the appellate authority set aside the impugned order, directing the appellant to submit all relevant documents for reevaluation of the refund claims. Emphasizing the importance of adhering to procedural requirements and providing opportunities for a fair hearing, the authority highlighted the necessity of issuing deficiency memos and show cause notices before rejecting refund claims. The judgment underscored the significance of upholding natural justice principles in administrative decisions related to tax matters under the CGST Act and Rules.