Case Law Details
Haren Textiles Private Limited Vs Deputy Commissioner of State Tax (Bombay High Court)
In Haren Textiles Private Limited vs Deputy Commissioner of State Tax, the Bombay High Court examined a challenge to refund orders where certain refund claims were rejected. The petitioner had applied for refunds, some of which were granted while others were denied through impugned orders.
The petitioner’s primary grievance was non-compliance with Rule 92(3) of the CGST Rules, 2017. This provision requires that where a refund claim is proposed to be rejected, the proper officer must issue a notice in Form GST RFD-08, invite a reply in Form GST RFD-09, and then pass a reasoned order after considering the reply. The proviso further mandates that no refund application shall be rejected without granting a reasonable opportunity of being heard.
The respondents contended that a hearing had been granted to the petitioner’s representative. However, the Court found that such compliance was not substantiated. It observed that Rule 92(3) specifically requires issuance of a show cause notice and consideration of the applicant’s reply before passing any order rejecting refund, along with providing an opportunity of hearing.
In view of this procedural requirement, the Court held that the impugned orders rejecting refund did not comply with Rule 92(3). Accordingly, it set aside the orders to the extent they denied refund and directed the authorities to reconsider the matter afresh in accordance with law and after following the prescribed procedure.
The Court also noted a separate issue regarding undertakings furnished by the petitioner not to press refund claims for certain periods, except specified months. The petitioner argued that such undertakings were given under compulsion, while the respondents maintained that they were voluntary and had resulted in benefits such as re-credit in the electronic ledger. The Court declined to adjudicate this dispute at this stage and clarified that all contentions on this issue remain open.
The matter was remanded to the authorities for fresh decision on refund claims in compliance with Rule 92(3), with directions to act expeditiously.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard learned counsel for the parties.
2. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.
3. The Petitioner applied for refund to the Respondents. By orders at Exhibit-C collectively (pages 129 to 190) and Exhibit-D collectively (pages 191 to 283) refunds for some periods were granted and for others, rejected.
4. Aggrieved by the portion of the above impugned orders rejecting the refunds, the Petitioner has instituted this petition. The Petitioner’s basic grievance relates to non-compliance with the provisions of Rule 92(3) of the Central Goods and Services Tax (CGST) Rules, 2017. Rule 92(3) reads as follows :-
“92. Order sanctioning refund:-
(3)Where the proper officer is satisfied, for reasons to be recorded in writing, that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in Form GST RFD-08 to the applicant, requiring him to furnish a reply in Form GST RFD-09 within a period of fifteen days of the receipt of such notice and after considering the reply, make an order in Form GST RFD-06, sanctioning the amount of refund in whole or part, or rejecting the said refund claim and the said order shall be made available to the applicant electronically and the provision of sub-rule (1) shall, mutatis mutandis, apply to the extent refund is allowed:
Provided that no application for refund shall be rejected without giving the applicant a reasonable opportunity of being heard.”
5. The Respondents have filed an affidavit that a hearing was given to the representative of the Petitioner. However, the same has not been made good. In any event, Rule 92(3) contemplates issue of a notice to the applicant to show cause as to why refund should not be ordered and upon considering the reply of the applicant, an order has to be made. The proviso also states that no application for refund shall be rejected without giving the applicant an opportunity of being heard.
6. Accordingly, we set aside the impugned orders to the extent they deny the Petitioner a refund. The Respondents will now have to comply with the requirements of Rule 92(3) and decide the matter afresh as expeditiously as possible.
7. Chavan, learned Additional Government Pleader for Respondent pointed out that the Petitioner has filed undertakings not to press for refund of all the export periods except July-2022, August-2022, September-2022 and regarding the inverted duty structure, for the periods from July-2022 to September-2022.
8. The learned counsel for the Petitioner has not disputed the furnished of undertakings, but has submitted that such undertakings should not prevent the Petitioner from seeking a refund. He submitted that the Petitioner’s representative was given a choice of furnishing the undertakings or otherwise foregoing the refunds even for the periods about which there was no dispute.
9. At this stage, we cannot adjudicate upon the above controversy. Ms. Chavan, states that the undertakings were voluntarily given and based on the undertakings, the Petitioner has also derived benefits. She stated that the Respondents have re-credited the amount in the Petitioner’s electronic credit ledger account.
10. As indicated earlier, we do not wish to enter into this controversy. Therefore, by setting aside the impugned orders to the extent they deny the refund, we restore the matter before the concerned Respondent for disposal of the refund application in accordance with law and by complying with the requirements Rule 92(3) of the CGST Rules, 2017. We clarify that all contentions of all the parties regards the refund, including the contentions based on the filing of undertakings are explicitly kept upon.
11. The Rule is made absolute in the above terms without any order for costs.
12. All concerned must act on an authenticated copy of this order.
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