K Line India Pvt. Ltd. Vs Union of India & Ors. (Bombay High Court)
The petitions concerned the rejection of GST refund applications and subsequent dismissal of appeals on limitation grounds. A common issue arose regarding whether the refund rejection was valid when passed without following the prescribed procedure under Rule 92 of the CGST Rules, 2017.
The petitioner, engaged in shipping services, had supplied services to a Special Economic Zone (SEZ) unit in December 2017, treating them as zero-rated supplies on payment of IGST. Consequently, the petitioner filed a refund application on 28 August 2018 for ₹2,70,040. The petitioner contended that the refund application ought to have been processed in accordance with Rule 92, which mandates issuance of a deficiency memo and grant of a hearing if any part of the refund is proposed to be rejected.
However, the designated officer passed an ex-parte order dated 13 September 2019 rejecting the refund application without issuing any deficiency memo or show cause notice, and without granting a hearing. Although the order was physically served on 25 September 2019, it was not uploaded on the GST portal.
Subsequently, the petitioner attempted to rectify the application on 31 January 2020 and filed a fresh refund application on 12 February 2020. On 27 February 2020, the department issued a deficiency memo on the fresh application, citing the absence of a copy of the appeal order and advising filing of a fresh application after rectification. No further action was taken on this deficiency memo.
