2023 (2) TMI 37 - HC - GST

Refund claim - person ultimately bearing the burden of tax - rejection only for the reason that the tax has been paid/deposited into the Government exchequer by M/s. Eveready and not the appellants and therefore, they are not entitled to maintain an application for grant of relief - Jurisdiction for the appellate authority to frame an issue suo moto - section 54 of the CGST Act and section 107(2) of the CGST Act - HELD THAT - The appellate authority has stated that the appellants are entitled to maintain the claim for refund. However, the second issue, which was suo motu framed by the appellate authority has been decided against the appellants. Firstly, the appellate authority has ignored the fundamental legal principles while deciding the appellants appeal. The appeal is against an order of rejection for the refund claim only on the ground that the appellants are not the persons, who had remitted the tax. In the said appeal, the appellants cannot be put in a disadvantageous position and cannot be worst off in their own appeal. Jurisdiction for the appellate authority to frame an issue suo moto - HELD THAT - Assuming the statute provides for a cross appeal to be filed and the State had filed a cross appeal, then the position would have been different. However, CGST Act does not provide for any such provision for filing a cross appeal by the revenue in a statutory appeal filed before the appellate authority under section 107 of the CGST Act. Thus, the issue has to be necessarily set aside. Whether the appellate authority is entitled to go into the other issues in terms of section 107(2) of the CGST Act? - HELD THAT - If the power under the said provision had to be invoked, then the appellants should have been put on notice. It is not the case of respondents/revenue that the appellate authority thought fit to take up the other issues, that too in an appeal filed by the appellants against an order of rejection of the refund claim. That apart, there is no direction issued to any authority to file an application for considering the other issues. Therefore, assuming appellate authority has exercised its power under section 107(2) of the CGST Act, such exercise is not in accordance with the said statutory provision and being in violation of the said provision as well as violation of the principles of natural justice. Petition allowed.

Summary

Issues:
1. Appeal against the order dismissing a writ petition challenging an order passed by the appellate authority under the CGST Act.
2. Rejection of a refund claim under section 54 of the CGST Act based on the entity that paid the tax.
3. Appellants' contention on being entitled to maintain a refund claim as the ultimate bearers of tax incidence.
4. Appellate authority's decision on the issues of recipient's eligibility for refund claim and taxability of a purchased building under GST.
5. Appellate authority's suo motu framing of the second issue and its impact on the appellants' appeal.
6. Jurisdictional aspects related to the framing and decision on the second issue by the appellate authority.

Analysis:
The High Court of Calcutta heard an intra-Court appeal challenging the dismissal of a writ petition against an order under the CGST Act. The original authority rejected a refund claim citing that the tax was paid by a different entity, not the appellants. The appellants argued that as the ultimate bearers of the tax, they were entitled to the refund. The appellate authority considered two issues: the eligibility of a service recipient to claim a refund and the taxability of a purchased building under GST. While the first issue was decided in favor of the appellants, the second issue, framed suo motu by the appellate authority, was decided against them. The Court highlighted that the appellants should not be disadvantaged in their own appeal and set aside the decision on the second issue, emphasizing the lack of jurisdiction for such framing. The Court allowed the appeal, quashed the relevant portion of the appellate authority's order, and directed the original authority to entertain the refund application within four weeks. The Court emphasized that the appellate authority's decision on the second issue was not in accordance with statutory provisions and violated principles of natural justice. The judgment underlines the importance of adhering to jurisdictional aspects and ensuring fairness in appellate proceedings under the CGST Act.