2023 (4) TMI 1063 - HC - GST

Refund of GST - Purchaser of flat (residential property) - application for refund by unregistered person - section 54 of the Goods and Services Tax (GST) Act, 2017 - HELD THAT - The learned Special Counsel for Respondent No. 1 points out that there have been substantial changes in the procedure governing the application for refund by unregistered persons such as the Petitioners. The learned Special Counsel for Respondent No. 1 states that this position was not in existence when the impugned order was passed. If the Petitioners succeed in demonstrating that there has been breach of principles of natural justice, the consequence will be to remand the proceedings to the authority for reconsideration. Considering the fact that the Petitioners are flat purchasers and unregistered persons and that the policy now has been evolved governing the application for refund by unregistered person subsequent to passing of the impugned order rejecting the refund, we are of the opinion that an opportunity needs to be given to the Petitioners for reconsideration of their claim for refund. The application of the Petitioners dated 4 September 2020 is restored to the file of Respondent No. 1- Deputy Commissioner of State Tax. Subject to earlier time bound commitment, the application be decided within twelve weeks from the date order is uploaded - Petition disposed off.

Summary

Issues:
The case involves a dispute regarding the entitlement of the Petitioners to claim refund of Goods and Services Tax (GST) under section 54 of the Goods and Services Tax (GST) Act, 2017. The Petitioners allege a breach of principles of natural justice in the order passed by Respondent No. 1 rejecting their refund claim.

Entitlement to Refund of GST:
The Petitioners had entered into an agreement for sale of a residential flat with Respondent No. 6, leading them to believe they were entitled to claim a GST refund. However, Respondent No. 1 rejected their refund application, stating that individuals like the Petitioners are not eligible for such refunds. The Petitioners skipped the appeal process, claiming the order breached natural justice principles. Respondent No. 1 highlighted changes in refund application procedures for unregistered persons post the order, indicating a need for reconsideration.

Breach of Principles of Natural Justice:
The Court acknowledged the need to remand the proceedings if a breach of natural justice is proven, allowing the Petitioners an opportunity for refund claim reconsideration. Considering the evolving policy for refund applications by unregistered persons and the Petitioners' status as flat purchasers, the Court deemed it necessary to grant the Petitioners a chance to have their refund claim reassessed. The Court emphasized that the decision on the refund claim lies with Respondent No. 1, based on the policy and merits, after providing adequate opportunity to the Petitioners as per statutory provisions.

Judgment:
The High Court quashed and set aside the impugned order dated 8 September 2022, restoring the Petitioners' application to the Deputy Commissioner of State Tax for reconsideration. The Court directed the Respondent to decide on the application within twelve weeks from the date of the order upload, emphasizing a time-bound commitment. Consequently, the Writ Petition was disposed of in accordance with the Court's decision.