2024 (3) TMI 393 - HC - GST

Violation of principles of natural justice - Seeking proportionate refund of cess i.e., cess paid on coal which was utilized in zero-rated supplies - Respondent No. 3 did not accept the show-cause reply filed by the petitioner and issued a rejection order rejecting the petitioner s claim pertaining to cess paid on inputs - HELD THAT - The learned appellate authority has misdirected itself in giving finding that personal hearing was given to the Assessee. However, the fact remains that P.H. was given on 15.01.2021 (during appellate proceeding), but not during original proceeding. Thus, the main ground of principle of natural justice has not at all been dealt with by the appellate authority and it went on giving the entire order on merits. Further, from perusal of the impugned rejection order of refund dated 31.07.2020 (Annexure-6), it transpires that the same is also non-speaking order i.e., without recording any reasons, though the same is mandatory under Rule 92(3) of the Rules, 2017, and therefore unsustainable and is fit to be quashed, inasmuch as, none of the submissions made by the petitioner has been considered and the claim of refund was rejected on the ground that P.H. scheduled on 30.07.2020, in this case, was not attended and no documents were uploaded/submitted to clarify/resolve the discrepancies as pointed in the SCN uploaded dated 15.07.2020 in form RFD-08 (Annexure-3). The principles of natural justice have not been followed in the instant case. As such, interest of justice would be sufficed by remitting the case to the respondent no. 3, to start proceeding from the stage of personal hearing. The instant writ application is allowed.

Summary

Issues Involved:

1. Violation of principles of natural justice.
2. Non-speaking order.
3. Absence of Document Identification Number (DIN) in SCN and rejection order.

Summary of Judgment:

1. Violation of Principles of Natural Justice:
The petitioner argued that the rejection of their refund claim was in violation of the principles of natural justice. The SCN dated 15.07.2020 was served on 16.07.2020, providing 15 days to respond. However, the personal hearing was prematurely scheduled for 30.07.2020. The petitioner submitted their reply on 31.07.2020, but the rejection order was issued the same day without considering this reply. The court noted that Rule 92(3) of the CGST Rules mandates a personal hearing and consideration of the reply before passing a rejection order. The court found that the rejection order dated 31.07.2020 was passed without providing an adequate opportunity for a hearing, thus violating the principles of natural justice.

2. Non-speaking Order:
The petitioner contended that the rejection order was a non-speaking order, lacking any recorded reasons for the decision. The court agreed, stating that Rule 92(3) requires the proper officer to record reasons in writing when rejecting a refund claim. The court cited precedents where similar non-speaking orders were quashed for failing to address the objections raised by the petitioner. The court concluded that the rejection order was unsustainable due to its lack of reasoning.

3. Absence of Document Identification Number (DIN):
The petitioner highlighted that the SCN and the rejection order did not bear a DIN, rendering them invalid as per Circular No. 122/41/2019-GST and Circular No. 128/47/2019-GST. The court noted that any communication without a DIN is deemed to have never been issued. The absence of DIN in the SCN and rejection order further invalidated the proceedings.

Conclusion:
The court found that the principles of natural justice were not followed, the rejection order was non-speaking, and the absence of DIN rendered the proceedings invalid. The court allowed the writ application, quashed the rejection order, and remitted the case to the respondent for fresh adjudication, ensuring compliance with the principles of natural justice, including a proper hearing and consideration of the petitioner's reply.