2022 (8) TMI 1044 - HC - GST

Refund claim - rejection of refund claim without even dealing with the request of the petitioner seeking extension of time for purposes of filing a reply to the show cause notice - petitioner placed reliance upon a CGST Notification No.35/2020-Central Tax issued by the Government on 03.04.2020 and as per which extension was envisaged even for purposes of filing a reply up to 30.06.2020 - principles of violation of natural justice - HELD THAT - The distinction being sought to be drawn in the extension Notification dated 03.04.2020 is not discernible from the plain language of the Notification itself. Even otherwise such distinction does not stand to reason. The extension of time had been granted by virtue of a Notification to cover all situations relating to the Covid-19 pandemic and the difficult circumstances arising therefrom. Even if the reply in the present case to the show cause notice had to be filed online, it goes without saying that certain documents/material had to be collected/collated for the purpose of filing a comprehensive reply. Even otherwise it is by now well settled that the validity and legality of an order has to be tested in terms of reasons assigned in the order itself. The distinction that is now sought to be drawn has been taken only at the stage of filing a reply and counter to the writ petition. Such distinction does not find a mention in the impugned order. The authorities were obligated to grant extension in time to the petitioner for submission of a reply to the show cause notice dated 23.04.2020 up to 30.06.2020 and thereafter to deal with the issue on merits - Petition allowed. The matter is remanded back to the Adjudicating Authority.

Summary

Issues:
Challenge to order rejecting refund claim, challenge to order affirming rejection, interpretation of time frame for response to show cause notice, applicability of extension notification, obligation to grant extension, disposal of refund application within 60 days, validity of orders based on reasons assigned.

Analysis:
The petitioner, an exporter of services, filed a refund claim for the period April 2018 to March 2019 under GST law. The Adjudicating Authority rejected the refund claim on 15.05.2020 without considering the petitioner's request for an extension due to the Covid-19 pandemic. The Appellate Authority affirmed the rejection, citing a 15-day response time frame for the show cause notice. However, the Appellate Authority did not address the extension notification dated 03.04.2020, which extended compliance deadlines due to the pandemic.

The respondents argued that the extension notification only applied to physical compliance requirements, not online filings. The court found this argument misconceived, stating the extension covered all pandemic-related difficulties. The court emphasized that the legality of an order must be tested based on reasons given in the order itself. The failure to consider the extension in the impugned order rendered it unsustainable.

Additionally, the respondents contended that every refund application must be disposed of within 60 days, or interest accrues. However, the court noted that the extension notification also extended this time frame beyond 60 days. The court concluded that the impugned orders were unsustainable as the petitioner was not given the opportunity to file a reply within the extended time frame.

The court allowed the writ petition, setting aside the impugned orders and remanding the matter to the Adjudicating Authority. The petitioner was granted three weeks to file a reply, after which the refund claim would be considered on merits. The court emphasized the importance of a reasoned order addressing all submissions and providing a personal hearing to the petitioner's representative.

In summary, the court's decision was based on the failure to grant the petitioner an extension for filing a reply to the show cause notice within the extended time frame. The court did not delve into the merits of the case but focused on procedural irregularities in the handling of the refund claim.