2024 (4) TMI 997 - HC - GST

Validity of adjudication order - without any application of mind - Rejection of application seeking refund - Show Cause Notice issued by an incompetent officer - HELD THAT - We are of the view that the course adopted by the Appellate Authority is not sustainable for the reason that once the Appellate Authority comes to the conclusion that the Show Cause Notice was issued by an officer who was not competent; reply was also considered by an incompetent authority and the Competent Authority had not applied its independent mind, the Appellate Authority could not have assumed original jurisdiction and proceeded further with the matter. The Appellate Authority could have only quashed the Show Cause Notice and the proceedings emanating therefrom while reserving the right of the Proper Officer to initiate appropriate proceedings in accordance with law. In view of the above and particularly in view of the fact that the course adopted by the Appellate Authority is not acceptable in law, the impugned order dated 17.04.2023 is set aside to the extent that it decides the claim of the petitioner on merits. The finding returned by the Appellate Authority that the Show Cause Notice has been issued by an incompetent authority and the adjudication order has been passed without any application of mind are not interfered with. The sequitur to that is that the Show Cause Notice dated 25.11.2021 adjudication order dated 14.12.2021 are not sustainable in law and are consequently set aside. Petition is allowed in the above terms. The appropriate authority shall consider the application of the petitioner seeking refund for the period April, 2022 to June, 2022 expeditiously in accordance with law.

Summary

Issues Involved:
The issues involved in this case are the validity of the Show Cause Notice issued by an incompetent officer, the consideration of reply by an authority not competent in law, and the failure of the competent authority to apply its independent mind while rejecting the refund application.

Validity of Show Cause Notice:
The appellant challenged the order passed by the Appellate Authority under the Central Goods and Service Tax Act, 2017, which dismissed the appeal impugning the order-in-original. The adjudication order rejecting the refund application of the petitioner was based on a Show Cause Notice issued by a Superintendent, who was not competent to do so according to the petitioner. The Appellate Authority found that the Show Cause Notice was indeed issued by an incompetent authority, rendering the subsequent adjudication order unsustainable.

Consideration of Reply by Incompetent Authority:
Although the reply to the Show Cause Notice was examined by a Range Superintendent, who was not the Competent Authority under the Act, the Adjudicating Authority rejected the refund based on this report. The Appellate Authority held that the Adjudicating Authority failed to apply its independent mind and solely relied on the report of the incompetent Range Superintendent, which was deemed unlawful.

Failure to Apply Independent Mind:
The Appellate Authority concluded that the Show Cause Notice was invalid, the reply was considered by an incompetent authority, and the Competent Authority did not independently assess the matter before rejecting the refund application. Therefore, the Appellate Authority set aside the impugned order to the extent that it decided the claim of the petitioner on merits, emphasizing that the original jurisdiction should not have been assumed after finding procedural irregularities. The Appellate Authority directed the appropriate authority to reconsider the refund application for the specified period promptly and in compliance with the law.