2021 (7) TMI 1213 - Commissioner - GST

Refund of IGST - IGST was paid inadvertently instead of CGST and SGST - refund claim of excess paid CGST - rejection of refund on the ground of time limitation - it is also alleged that reply to SCN does not address the issue of delay in filing refund application - period July, 2017 to March, 2018 - Section 54 of CGST Act, 2017 - principles of natural justice - HELD THAT - Despite the submission of written reply, adjudicating authority has passed the Orders-in-Original all dated 23-4-2020 wherein he has rejected the refund claims without granting any opportunity of personal hearing to the appellant. Moreover, adjudicating authority did not consider appellant s request for adjournment of personal hearing until COVID-19 is eased. Thus, it is found that the appellant did not avail the opportunity of personal hearing in the matter. The adjudicating authority while rejecting the refund claims of the appellant neither considered their defence submission/reply nor first request for seeking adjournment of personal hearing due to COVID-19 lockdown. Moreover, the adjudicating authority did not discuss any provisions of law/rules and method on the issue of time barred on which basis the refund claims become time barred - also, passing of non-speaking order indeed amount to denial of natural justice. Before passing of orders the request for seeking adjournment for personal hearing in the matter should have been considered and speaking order should have been passed by giving proper opportunity of personal hearing in the matter to the appellant and detailing factors leading to rejection of refund claims should have been discussed - case remanded to the adjudicating authority for decide the case afresh by following the principle of natural justice and for passing the speaking order in view of submission of appellant - appeal allowed by way of remand.

Summary

Issues Involved:
1. Rejection of refund claims under Section 54 of the CGST Act, 2017.
2. Time-barred nature of refund applications.
3. Violation of principles of natural justice by the adjudicating authority.

Detailed Analysis:

Issue 1: Rejection of Refund Claims
The appellant, engaged in the manufacture of lubricating oils, filed refund claims under Section 54 of the CGST Act, 2017, for taxes paid under the incorrect head (IGST instead of CGST and SGST). The refund claims were rejected by the adjudicating authority on the grounds that the applications were time-barred, as per Section 54 of the CGST Act, 2017. The appellant argued that the rejection ignored the facts and documentary evidence provided, and that the tax was paid twice due to a bona fide mistake. The appellant cited Section 77 of the CGST Act, 2017, which allows for a refund of taxes paid under the wrong head, and argued that the correct tax was paid via DRC-03 forms in December 2019.

Issue 2: Time-Barred Nature of Refund Applications
The adjudicating authority's rejection was based on the claim that the refund applications were filed beyond the two-year limit prescribed by Section 54(1) of the CGST Act, 2017. The appellant contended that the relevant date for calculating the time limit should be the date of payment of the correctly assessed tax (December 2019), not the date of the original incorrect payment. The appellant also argued that the GSTN portal issues prevented them from filing the refund application under the correct category, leading them to file under "Excess payment of tax" as a precaution.

Issue 3: Violation of Principles of Natural Justice
The appellant claimed that the adjudicating authority violated the principles of natural justice by not granting an opportunity for a personal hearing and by not considering their reply to the show cause notices. The show cause notices directed the appellant to reply within fifteen days and set a hearing date within this period, which coincided with the COVID-19 lockdown. The appellant submitted their reply online within the prescribed period but could not attend the hearing due to the lockdown. The adjudicating authority proceeded to reject the claims without considering the appellant's request for an adjournment or their submitted evidence.

Conclusion:
The appellate authority found that the adjudicating authority failed to consider the appellant's submissions and requests for adjournment, and did not provide a proper opportunity for a personal hearing, thereby violating the principles of natural justice. The orders were deemed non-speaking and lacking in detailed reasoning. Consequently, the case was remanded back to the adjudicating authority to be decided afresh, ensuring adherence to the principles of natural justice and the issuance of a speaking order after considering all relevant submissions and documents from the appellant. The appeals were disposed of accordingly.