2024 (10) TMI 1039 - HC - GST

Violation of principles of natural justice - Rejection of Petitioner s refund claim without bothering to grant the Petitioner an opportunity of hearing or even considering the Petitioner s reply - HELD THAT - In the show cause notice dated 29 December 2021, 15 days were granted to the Petitioner to submit a reply. Without any justification, this period was curtailed. In the curtailed period, the Petitioner did file a fairly detailed reply. That reply has not even been considered, and there is no justification for why no opportunity of hearing was granted to the Petitioner despite the Petitioner specifically requesting the same. All this is sufficient to hold that there was a failure of natural justice in making the order dated 7 January 2022. The appellate authority has not considered the challenge based on the failure of natural justice. Even the reasoning of the appellate authority does not align with the proposed reasons in the show cause notice. The Appellate Authority has addressed a point about which the Petitioner was never put to any notice in the show-cause notice served on the Petitioner. These are sufficient grounds to set aside the order dated 30 September 2022 made by the appellate authority. The Assistant Commissioner s order dated 7 January 2021 and the appellate authority s order dated 30 September 2022 are set aside - matter is now remanded to the Assistant Commissioner to decide the Petitioner s refund claim as expeditiously as possible - petition allowed by way of remand.

Summary

Issues:
Challenge to order rejecting refund claim based on failure of natural justice and flawed decision-making process.

Analysis:
The Petitioner challenged the order rejecting their refund claim, which was based on the accumulation of Input Tax Credit (ITC) due to the export of services. The Assistant Commissioner rejected the refund claim without granting the Petitioner an opportunity for a personal hearing or considering their detailed reply to the show cause notice. The Court found a failure of natural justice in the decision-making process of the Assistant Commissioner.

The Court noted that the Assistant Commissioner did not justify the curtailment of the time given to the Petitioner to file a reply, nor did they consider the detailed reply submitted by the Petitioner. Despite the Petitioner's specific request for a personal hearing, no opportunity was granted. This lack of consideration and opportunity for hearing amounted to a violation of natural justice, leading to the setting aside of the Assistant Commissioner's order and the appellate authority's subsequent order.

The Court remanded the matter back to the Assistant Commissioner, directing them to decide on the refund claim expeditiously, within two months, and to consider both the initial reply and any additional reply that the Petitioner may choose to file. The Assistant Commissioner was instructed to provide the Petitioner with an opportunity to be heard and to pass a speaking order, ensuring a fair decision-making process.

Regarding the objection raised about the availability of an alternate remedy through appeal to the Central Goods and Service Tax Tribunal, the Court held that in cases involving a violation of natural justice, such objections cannot be upheld. The Court clarified that their interference with the impugned orders was based on procedural flaws and not on the merits of the case, leaving all contentions open for further consideration.

In conclusion, the Court made the Rule absolute in the terms mentioned, with no order for costs. All parties were instructed to act upon an authenticated copy of the judgment and order, emphasizing the importance of a fair and just decision-making process in legal proceedings.