2022 (1) TMI 548 - HC - GST

Refund of unutilised input tax credit - officer concerned proceeded on leave on personal grounds and therefore, the matter was assigned to another officer, who was required to give a fresh opportunity of personal hearing to the petitioner - newly appointed officer, without availing any opportunity of hearing passed an order, rejecting the claim of refund - principles of natural justice - HELD THAT - This Court is of the opinion that the order impugned needs to be quashed and the matter should be remitted by the officer concerned from the stage where he has not followed the principle of natural justice. It is quite obvious and barely there arises any need for the Court to elaborate that once a show cause notice for the refund claim of ₹ 36,85,893/- is issued at the best, the rejection that can be made is for the amount for which the show cause notice is issued and surely not for any higher amount than specified in show cause notice. It is quite obvious that is a gross and apparent mistake that the authority concerned has travelled beyond the scope of show cause notice. That itself is the valid and opt ground for the Court to interfere - Non availment of the opportunity of hearing, more particularly when it affects adversely the petitioner and exceeds the scope of show cause notice, the order deserves indulgence. Noticing the fact that the grievance is with regard to the non availment of opportunity of hearing and being a breach on procedural side, let the same be ordered to be cured without quashing and setting aside the show cause notice itself - the respondent authority is directed to avail an opportunity to the petitioner in relation to the show cause notice dated 16/18.03.2021 to schedule a day for hearing and if the physical hearing is not permitted, the authority concerned shall virtually hear the petitioner and decide the matter in accordance with law bearing in mind the basic requirement. Petition allowed.

Summary

Issues:
1. Refund of unutilized input tax credit under IGST Act, 2017.
2. Show cause notice proposing rejection of refund application.
3. Violation of principles of natural justice in rejecting the entire refund claim.
4. Appeal challenging the rejection of the refund order.
5. Quashing and setting aside the rejection order of refund.

Analysis:
1. The petitioner, engaged in providing customer solution services, exports services under the IGST Act, 2017. A refund claim of &8377; 2,84,04,175/- for the period February 2019 to March 2020 was filed. The authority issued a show cause notice proposing to reject &8377; 36,85,893/- of the claim.
2. The petitioner responded justifying the refund claim and made oral submissions during a personal hearing. However, the order rejecting the entire claim was passed without availing a fresh opportunity of hearing, leading to the petitioner's grievance.
3. The petitioner approached the High Court seeking relief, highlighting the violation of principles of natural justice in rejecting the entire refund claim without restricting it to the amount specified in the show cause notice.
4. During the hearing, the learned advocate for the petitioner emphasized the need for urgent intervention due to the clear violation of natural justice, while the respondent had no satisfactory response, acknowledging the error in passing the order without proper hearing.
5. The High Court, after considering the submissions and legal principles, quashed the rejection order and directed the authority to provide the petitioner with a fresh opportunity for a hearing in relation to the show cause notice dated 16/18.03.2021. The Court emphasized the importance of adhering to procedural fairness and basic legal requirements in such matters.

This detailed analysis covers the issues related to the refund claim, show cause notice, violation of natural justice, appeal process, and the final judgment of the High Court, ensuring a comprehensive understanding of the legal proceedings and outcomes.