2022 (1) TMI 204 - HC - Service Tax

Refund of service tax - refund sought on the premise that it had not been able to avail input tax credit on the said amount - opportunity for a hearing not provided - violation of principles of natural justice - HELD THAT - This writ petition can be disposed of without going into the merits of the matter. There are no propose to enter into the merits of the controversy or to render any finding as to whether a notice for personal hearing was actually issued to the petitioner or not. The Learned Standing Counsel is justified in asserting that a person who failed to avail an opportunity cannot be heard to complain of a violation of the principles of natural justice. However, one cannot lose sight of the fact that this is not a case where there has been a consistent default on the part of the petitioner in appearing for a personal hearing. Further opportunity should have been granted to the petitioner for a personal hearing - Petition allowed.

Summary

Issues Involved:
1. Challenge to rejection of refund claim based on non-availability of input tax credit.
2. Allegation of violation of principles of natural justice in issuing the rejection order.

Issue 1: Challenge to rejection of refund claim based on non-availability of input tax credit

The petitioner, a company engaged in the business of manufacturing and exporting spice oleoresins and extracts, voluntarily paid service tax under the Reverse Charge Mechanism for ocean freight post the introduction of the Goods and Services Tax (GST) regime. The company filed a declaration in Form GST-TRAN-1 to claim input tax credit but missed claiming the service tax paid on ocean freight. Subsequently, the petitioner sought a refund of the service tax amount paid, contending that it was not able to avail input tax credit on the said amount. The claim for refund was rejected through an order, and the petitioner filed an appeal challenging the rejection. The appeal was further rejected, leading to the filing of a writ petition primarily on the grounds of violation of principles of natural justice in the issuance of the rejection order.

Issue 2: Allegation of violation of principles of natural justice in issuing the rejection order

The petitioner alleged that the rejection order was issued in violation of principles of natural justice as it claimed that no intimation regarding an opportunity for personal hearing was given. The petitioner contended that although the order stated that a personal hearing opportunity was extended, no such intimation was received. The petitioner argued that the order was issued without proper adherence to the principles of natural justice, highlighting that consent for video conferencing should have been obtained in advance, and a minimum of three adjournments is usually granted to enable the concerned party to attend the hearing. The court, after hearing arguments from both sides, concluded that the appeal should have been adjudicated with proper notice to the petitioner, emphasizing the importance of providing opportunities for parties to influence the course of events and the need for adherence to natural justice principles.

In conclusion, the court allowed the writ petition, setting aside the rejection order and restoring the appeal for fresh adjudication with notice to the petitioner. The court directed that the notice for the appeal should be served by email on an address specified by the petitioner, ensuring proper compliance with the principles of natural justice. The 1st respondent was instructed to dispose of the appeal within a specified timeframe, emphasizing the importance of granting further opportunities for personal hearings and ensuring a fair and just adjudication process.