Refund rejection order not proper when required information for defending the claim made is not provided to the Appellant

[Bimal jain]

The Hon’ble Madras High Court in the case TVL. ORANGE SORTING MACHINES (INDIA) PRIVATE LIMITED VERSUS ASSISTANT COMMISSIONER COIMBATORE. DEPUTY STATE TAX OFFICER-I ANNUR CIRCLE, COIMBATORE. - 2024 (6) TMI 1237 - MADRAS HIGH COURT quashed the impugned order as the Department failed to provide a breakup of the amount demanded, thereby holding that the refund rejection order is not proper when required information for defending the claim made is not provided to the Applicant.

Facts:

Tvl. Orange Sorting Machines (India) (P.) Ltd (“the Petitioner”) is engaged in the manufacturing of machines and claimed refunds of accumulated Input Tax Credit (“ITC”) under inverted duty structure. Thereafter, a show-cause notice dated September 22, 2023 (“the SCN”) was issued claiming Rs. 7,51,961 it was specified as an erroneous refund.  Subsequently, the Petitioner   in its reply filed, requested for a breakup of the amount so that they can reply notice appropriately.  The Respondent without providing a breakup of the claimed amount, issued order dated December 29, 2023 (“the Impugned Order”) demanding payment of a total sum of Rs.3,84,922/- towards erroneous refund.

Issue:

Whether refund rejection order is proper when required information for defending the claim made is not provided to the Appellant?

Held:

The Hon’ble Madras High Court in TVL. ORANGE SORTING MACHINES (INDIA) PRIVATE LIMITED VERSUS ASSISTANT COMMISSIONER COIMBATORE. DEPUTY STATE TAX OFFICER-I ANNUR CIRCLE, COIMBATORE. - 2024 (6) TMI 1237 - MADRAS HIGH COURT held as under

• Noted that, unless SCN does not provide the particulars of the claimed amount, it would not be possible for the petitioner to reply in a meaningful manner to the SCN.
• Opined that, the Impugned Order and Notice are bereft of particulars and need to be interfered with.
• Held that, the Impugned Order is quashed and matter is remitted back for reconsideration.

Our comments:

The Hon’ble High Court affirmed the principle laid out legal maxim of "Audi Alteram Partem” i.e. let the other party be heard. The chance of being heard does not only mean letting the other party speak but to also providing the relevant information for the other party to provide a meaningful defence.

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