2021 (7) TMI 850 - AT - Central Excise

Rejection of Refund claim in cash of differential duty - SCN was not issued - principles of natural justice - Section 142 (3) of the C.G.S.T. Act, 2017 - HELD THAT - The Order-in-Original has been passed undoubtedly without the issuance of Show Cause Notice. The Commissioner (Appeals) in the impugned Order has also observed that one Shri P. Veera Kumar appeared before the Adjudicating Authority, but however, both the authorities below are silent as to whether the said person, who is alleged to have been heard, was well-versed with the law and the change in law and whether the said person was authorized by the appellant-company to argue before the authorities. It is the basic tenet of our Constitution that justice should not only be done, but should manifestly and undoubtedly be seen to be done . The fundamental principle has to be followed along with the principles of audi alteram partem and any Order which creates a doubt as to the manner in which it was passed, has to be held as having passed without adhering to the above principles, which view is also supported by various decisions relied upon by the Learned Advocate for the appellant. The fundamental principles of law are at stake and the Orders have been passed without affording proper and reasonable opportunities to the appellant - the matter is remanded to the file of the Adjudicating Authority to pass a fresh order, following the principles of audi alteram partem, especially in the light of the change in law - appeal is allowed by way of remand.

Summary

Issues: Refund rejection, Show Cause Notice violation, Principles of natural justice

Refund Rejection Analysis:
The appellant filed a refund claim for Excise Duty passed on to them by another entity. The appellant argued that post the introduction of the Central Goods and Services Tax Act, they should be eligible for the refund in cash as per Section 142(3) of the CGST Act, 2017. The appellant contended that the Adjudicating Authority did not issue a Show Cause Notice, which is a legal requirement, and the Order-in-Original suffered from legal infirmity. The appellant sought to set aside the impugned order and requested the Revenue to grant the refund with consequential benefits.

Show Cause Notice Violation Analysis:
The Authorized Representative for the Revenue supported the lower authorities' findings, stating that the Show Cause Notice was not mandatory as per Section 11 of the Central Excise Act, 1944. The Revenue argued that on receipt of a refund application, the concerned authority must verify its order before proceeding to work on the refund or reject it. The absence of a Show Cause Notice was defended under Section 11B of the Act. However, the Order-in-Original was passed without issuing a Show Cause Notice, raising concerns about the lack of proper opportunity for the appellant to present their case effectively.

Principles of Natural Justice Analysis:
The Tribunal highlighted the importance of adhering to the principles of natural justice, emphasizing that justice should not only be done but should also be seen to be done. The Tribunal noted that the Order-in-Original was passed without ensuring that the appellant was afforded proper and reasonable opportunities. Citing the fundamental principle of audi alteram partem, the Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority for a fresh decision, stressing the need to follow the principles of natural justice, especially in light of the changes in the law.

In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the significance of upholding the principles of natural justice and ensuring a fair and transparent adjudication process in matters concerning refunds and legal proceedings.