2023 (11) TMI 351 - HC - GST

Rejection of Refund claim - rejection on the ground that, one of the suppliers, was non-existent at its registered place of business - rejection also on the ground that the documents submitted by the petitioner failed to establish that the petitioner had paid for the goods and services within a period of 180 days from the date of the invoices. HELD THAT - It is material to note that the show cause notices issued to the petitioner by the Adjudicating Authority did not propose to reject the refund applications on the ground that it had made payments for the supplies beyond the period of one hundred and eighty days from the date of issuance of invoices. Thus, the orders passed by the Adjudicating Authority proceed on a ground, which was not put to the petitioner at the material time. The show cause notice also did not mention the specific registered dealer (M/s Yamuna Overseas) which is alleged to be non-existent. It is considered apposite to set aside the impugned order as well as the orders dated 28.09.2020 rejecting the applications filed by the petitioner for refund pertaining to the period January, 2020 to March, 2020 and remand the matter to the Adjudicating Authority to consider afresh. Since the allegation that M/s Yamuna Overseas is non-existent and that the petitioner had not paid the amount due as per the invoices within the period of one hundred and eighty days is articulated in the impugned order, it would not be necessary for the Adjudicating Authority to issue a fresh show cause notice. Petition disposed off by way of remand.

Summary

Issues involved:
The petitioner filed a petition challenging the rejection of refund applications for the period January, 2020 to March, 2020 under the Central Goods and Services Tax Act, 2017 and the State Goods and Services Tax Act, 2017. The rejection was based on the grounds of availing input tax credit from "non-existent / high risk" entities and failure to prove timely payment for goods and services.

Issue 1: Rejection of refund applications based on supplier's existence and payment timeline

The petitioner sought refund of Rs. 18,00,202 for the period January, 2020 to March, 2020. The Adjudicating Authority rejected the applications citing availing input tax credit from a supposedly non-existent supplier, M/s. Yamuna Overseas, and failure to demonstrate payment within 180 days from invoice dates. Despite providing invoices and bank statements, the refund claims were denied.

Issue 2: Appeal and rejection by Appellate Authority

The petitioner contested the rejection and filed appeals under Section 107 of the CGST Act. However, the Appellate Authority upheld the decision to reject the refund applications, leading to the petitioner's further challenge through the present petition.

Issue 3: Grounds for setting aside the impugned order

The High Court set aside the impugned order and the rejection of refund applications, directing a fresh consideration by the Adjudicating Authority. The Court noted discrepancies in the rejection grounds, particularly the failure to mention payment timelines and the specific non-existent dealer. The petitioner was instructed to provide necessary documentation, including a reconciliation statement, within four weeks for a renewed review of the refund applications.

This judgment highlights the importance of procedural fairness and the need for clear communication of grounds for rejection in tax refund cases. The Court's decision to remand the matter for fresh consideration emphasizes the significance of providing adequate opportunity for the petitioner to address the allegations and submit relevant evidence.