2024 (12) TMI 929 - HC - GST

Rejection of petitioner s application for a refund - alleged procedural deficiencies - violation of principles of natural justice - HELD THAT - M/s Knowledge Capital Services Private Limited 2023 (4) TMI 752 - BOMBAY HIGH COURT , after referring to the relevant legal provisions, does hold that the deficiencies in the refund application have to be brought to the notice of the applicant in form GST RFD-03 so that the applicant can take steps as permissible under the law in that regard. In this case, there is no record of such deficiency memo or notice in terms of GST RFD-03 being issued to the petitioner. Though prima facie GST RFD-03 may not have been issued to the petitioner, even the petitioner failed to avail of the opportunity granted to the petitioner to raise such contentions in response to the show cause notice. Merely seeking adjournments and then contending that adjournment applications were not responded to or decided one way or the other is not grounds to complain about any failure of natural justice. In this case, the petitioner must accept the blame for not responding to the show cause notice within the time granted and raising the contentions which have now been raised after the impugned order was made. Since there was no response we cannot fault the respondents for making the impugned order. The interest of justice in such a situation would require the petitioner to pay costs of Rs. 2,00,000/- within 4 weeks from today to the 2nd respondent. Subject to depositing such costs within 4 weeks from today, given the peculiar circumstances and the fact that no GST RFD-03 was issued to the petitioner, the impugned order dated 30 April 2024 set aside and the petitioner s refund application made in form GST RFD-01 restored to the file.

Summary

Issues: Challenge to impugned order rejecting refund application due to alleged procedural deficiencies and breach of natural justice.

The judgment pertains to a petition challenging an order that rejected the petitioner's application for a refund. The petitioner argued that despite the appeal being rejected for procedural deficiencies, no deficiency memo was issued, denying them the opportunity to rectify the shortcomings as mandated by a previous court decision. On the other hand, the respondent contended that a show-cause notice was issued to the petitioner, who failed to respond, leading to the impugned order. The court noted that while no deficiency memo was issued, the petitioner did not respond to the show-cause notice, which led to the rejection of the refund application.

The court referred to a previous decision that highlighted the necessity of issuing a deficiency memo in cases of refund application deficiencies, which was not done in this instance. However, the respondent had issued a show-cause notice to the petitioner, listing reasons why the refund application could be rejected. The court emphasized that the petitioner's failure to respond to the show-cause notice within the given time frame cannot be attributed to a breach of natural justice. Consequently, the court held the petitioner responsible for not availing the opportunity to raise contentions in response to the notice, ultimately leading to the rejection of the refund application.

In light of the circumstances and the absence of a formal deficiency memo, the court directed the petitioner to pay costs to the respondent and set aside the impugned order. The court instructed the respondent to reprocess the petitioner's application, intimating any deficiencies using the required form. The petitioner was granted the opportunity to rectify any deficiencies upon receiving such intimation. The court specified a timeline for the completion of the further process contingent upon the payment of costs by the petitioner.

The court clarified that it did not evaluate the merits of the refund application, keeping all contentions open for future consideration. The judgment concluded by making the rule absolute subject to the payment of costs, with all parties instructed to act upon the authenticated copy of the order.