2023 (3) TMI 1264 - HC - GST

Maintainability of petition - petitioner does not have an equally efficacious remedy of an appeal before the Goods and Services Tax Tribunal because the same has not been constituted as yet - denial of refund of integrated tax paid in respect of services provided to an entity located overseas - opportunity of hearing not provided - principles of natural justice - HELD THAT - It is not disputed that the petitioner was not given an opportunity to meet the case that it was not entitled to refund as the services provided by it was as an intermediary. It is, thus, clear that the impugned order has been passed in violation of the principles of natural justice. It is considered apposite to set aside the impugned order and matter remanded to the Appellate Authority to decide the petitioner s appeal afresh, including the question as to whether the Appellate Authority has the jurisdiction to set up a new case against the assessee, which was not a subject matter of either the show cause notice or the enquiry before the Adjudicating Authority. The appeal filed by the petitioner is restored before the Appellate Authority. The Appellate Authority is directed to decide the petitioner s appeal afresh in accordance with law after affording the petitioner an opportunity to be heard.

Summary

Issues involved:
The issues involved in the judgment are the denial of refund of integrated tax paid on services provided to an overseas entity based on the classification of the petitioner as an 'intermediary,' the violation of principles of natural justice due to introducing a new ground for denial of refund by the Appellate Authority, and the jurisdiction of the Appellate Authority to set up a new case against the assessee without prior notice.

Denial of Refund based on 'Intermediary' Classification:
The petitioner sought a refund of integrated tax paid on services exported in April 2020. The Adjudicating Authority issued a show cause notice proposing to deny the refund on the grounds of the petitioner and the service recipient not being distinct persons. Despite the petitioner's response disputing this, the refund was rejected. The Appellate Authority, while acknowledging the entities as separate tax entities, denied the refund by classifying the petitioner as an 'intermediary' under the IGST Act, thus disqualifying the services as export of services. This new ground was not part of the original proceedings, leading to a violation of natural justice principles.

Violation of Principles of Natural Justice:
The Appellate Authority introduced a new ground for denial of refund, labeling the petitioner as an intermediary, which was not part of the initial show cause notice or proceedings. This action deprived the petitioner of the opportunity to address this classification at any stage. The judgment highlighted that passing an order without giving the petitioner a chance to rebut the new ground goes against the principles of natural justice.

Jurisdiction of the Appellate Authority:
The judgment questioned the jurisdiction of the Appellate Authority to introduce a completely new basis for denying a refund without prior notice to the petitioner. It emphasized that the Appellate Authority should not expand the scope of controversy by introducing fresh grounds for denial of refund. The judgment concluded that the impugned order was passed in violation of natural justice principles and directed the matter to be remanded to the Appellate Authority for a fresh decision, ensuring the petitioner's right to be heard.

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