Case Law Details
Marathon Electric India Private Limited Vs Union of India & Ors. (Bombay High Court)
GST Refund Order Quashed as Appellate Authority Ignored Taxpayer’s Submissions; Bombay HC Remands GST Export Refund Dispute for Fresh Decision Due to Lack of Reasoning; Non-Application of Mind in GST Refund Rejection Leads to Remand by Bombay HC; Bombay HC Says GST Refund Cannot Be Denied Without Reasoned Findings.
In , the petitioner challenged an order dated 24 April 2023 passed by the appellate authority rejecting its GST refund claim of Rs. 54,31,283/-. The petitioner sought quashing of the order and a declaration that the services rendered to a USA-based company qualified as export of services, making the refund admissible. The petitioner also sought interest on delayed refund under Section 56 of the CGST Act, 2017.
The petitioner was engaged in providing information technology software services and had entered into a service agreement with Regal Beloit America Inc. (RBA), a company based in the United States, for customized IT services. According to the petitioner, all conditions required for export of services were fulfilled, and the supplies were accordingly disclosed as export of services without payment of GST.
On 4 April 2022, the petitioner filed a refund application in Form GST-RFD-01 for the period from April 2020 to March 2021, claiming refund of Rs. 54,31,283/-. Subsequently, a show-cause notice in Form GST-RFD-08 was issued on 20 May 2022, to which the petitioner replied in Form GST-RFD-09 on 3 June 2022.
After a personal hearing, the refund claim was rejected by Respondent No. 4 through an order dated 7 June 2022 in Form GST-RFD-06. Aggrieved by this rejection, the petitioner filed an appeal before Respondent No. 3. During appellate proceedings, another show-cause notice dated 15 December 2022 was issued, and the petitioner filed its reply on 16 January 2023. A personal hearing was granted on 16 February 2023. However, by the impugned order dated 24 April 2023, the appellate authority rejected the refund claim and upheld the earlier rejection order.
The petitioner argued before the Bombay High Court that the appellate authority had passed the impugned order without considering the submissions made during the personal hearing or the detailed reply filed by the petitioner. It was contended that the order suffered from non-application of mind and that the refund rejection had not been properly justified. The petitioner further relied upon several earlier decisions of the Bombay High Court where similar matters had been remanded back for fresh adjudication because the authorities failed to consider the assessee’s submissions.
The State opposed the petition and argued that the impugned order was a reasoned and speaking order and therefore deserved to be upheld.
After hearing both sides, the Bombay High Court observed that a consistent view had already been taken in similar cases cited by the petitioner. The Court found merit in the petitioner’s contention that the appellate authority had not recorded any specific findings while rejecting the refund claim. The Court held that a proper reasoned and speaking order was required before rejecting such a refund application. Since the impugned order failed to address the petitioner’s submissions adequately, the Court held that the order suffered from the defect of being a non-speaking order.
Accordingly, the Bombay High Court quashed and set aside the appellate order dated 24 April 2023. The matter was remanded back to Respondent No. 3 for de novo consideration of the refund claim after granting hearing to the parties and passing a fresh order in accordance with law. The Court directed that the exercise be completed within three months. All contentions of both parties were kept open, and the petition was disposed of without costs.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. This Petition under Article 226 of the Constitution of India has been filed praying for the following substantive reliefs:-
“a) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions set aside and quash the impugned order dated 24.04.2023 (Exhibit “A”), passed by the Respondent No. 3;
b) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions hold that the petitioner is entitled to full refund of Rs.54,31,283/- (IGST of Rs.12,79,563/-, CGST of Rs.20,75,860/- & SGST of Rs.20,75,860/-), filed vide RFD 01, for the period 1.04.2020 to 31.03.2021;
c) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions hold that the petitioner and M/s. RBA, are independent contractors, engaged in business on principal-to-principal basis.
d) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions hold that the petitioner is not providing services as an “agent” of M/s. RBA;
e) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions hold that the service rendered by petitioner satisfies the requirement of export of service and accordingly, the petitioner is eligible for refund amounting to Rs. Rs.54,31,283/- (IGST of Rs.12,79,563/-, CGST of Rs.20,75,860/- & SGST of Rs.20,75,860/-), and direct the Respondent No.3 & 4 to process the same along with interest under Section 56 of the CGST Act, 2017;
f) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions hold that the petitioner is entitled to interest on delayed refund at the rate of 18%;
g) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions direct the Respondent No. 3 to grant the interest on delayed refund as per Section 56 of the CGST Act, 2017;”
2. The facts lie in a very narrow compass:-
i. The Petitioner is inter alia engaged in business of providing information technology software services and had entered into a service agreement with M/s. Regal Beloit America Inc. (hereinafter referred to as “M/s. RBA”), a USA based company for supply of customized information technology services. It is the Petitioner’s contention that as all conditions of export of services had been fulfilled, the Petitioner had shown the supply as an export of services without payment of tax in its Goods and Services Tax (GST) returns.
ii. On 4th April 2022, the Petitioner filed a refund claim of Rs. 54,31,283/- in form GST-RFD-01 for the period April 2020 to March 2021. Thereafter, on 20th May 2022, Respondent No. 4 issued a show-cause notice to the Petitioner in Form GST-RFD-08 and in response thereto, the Petitioner filed their reply dated 3rd June 2022 in Form GST-RFD-09.
iii. On 10th October 2022, a personal hearing in respect of the aforesaid show-cause notice was granted to the Petitioner, and on 7th June 2022, Respondent No. 4 vide refund rejection/sanction order in Form GST-RFD-06 rejected the refund of Rs. 54,31,283/-.
iv. Being aggrieved by the aforesaid rejection, the Petitioner filed an appeal before Respondent No. 3, and thereafter a show cause notice dated 15th December 2022 was issued to the Petitioner by Respondent No. 3, to which the Petitioner responded by reply dated 16th January 2023. A personal hearing was thereafter accorded to the Petitioner on 16th February 2023, and an order dated 24th April 2023 (hereinafter referred to as the impugned order) was passed by Respondent No. 3, rejecting the refund of Rs. 54,31,283/- for the period 1″ April 2020 to 31St March 2021, thereby upholding the order dated 7th June 2022 passed by Respondent No. 4.
3. It is in the backdrop of the above facts that the Petitioner, being aggrieved by the impugned order, has filed the present petition.
4. Learned counsel Mr. Bharat Raichandani, Mr. Suraj Ghadigaonkar, and Mr. Yashvardhan Sharma appeared for the Petitioner, and Ms. Shruti Vyas, Addl.G.P. and Mr. Aditya Deolkar AGP appeared for Respondent-State. We have perused the papers and proceedings with the assistance of the learned Counsel for the parties.
5. It is the contention of Mr. Raichandani, learned Counsel appearing for the Petitioner that the impugned order has been passed without dealing/adverting to the submissions made by the Petitioner at the time of personal hearing, as well as the contentions raised by the Petitioner in their reply dated 16th January 2023. He has therefore submitted that the rejection of refund as claimed by the Petitioner has not been correctly made and the impugned order has been passed on a non-application of mind. He has therefore submitted that the impugned order needs to be set aside, and a fresh hearing needs to be accorded to the Petitioner wherein the Petitioner’s refund claim has to be adjudicated afresh. He has further submitted that this Court in a series of decisions, which were based on similar facts/circumstances and where impugned orders were passed without considering submissions made by the assessee(s), has remanded the matter back to the Appellate Authority for de novo consideration, referring particularly to the decision rendered by the co-ordinate Bench of this Court in the case of Sundyne Pumps and Compressors India Pvt. Ltd. vs. Union of India. He has sought to place reliance on the following decisions rendered by this Court:-
i. Lubrizol Advance Materials India Ltd. Vs. Union of India & Ors. (Writ Petition No. 987 of 2026)
ii. Vistex Asia Pacific Private Limited vs. Union of India & Ors. (Writ Petition No. 4852 of 2022)
iii. V Ships India Pvt. Ltd. vs. Union of India & Ors. (Writ Petition No. 1534 of 2025)
iv. Magna Automotive India Private Limited vs. Union of India & Ors. (Writ Petition No. 6501 of 2024)
v. Sundyne Pumps and Compressors India Pvt. Ltd. vs. Union of India (Writ Petition No. 15228 of 2023)
6. Per contra, Vyas, learned Addl. G.P. for the State has opposed the reliefs as prayed for in the present Petition and submitted that the impugned order needs to be upheld as the same is a well reasoned and speaking order.
7. Having heard learned Counsel for the parties, and considering that a consistent view has been taken by this Court in the orders referred to by the learned Counsel for the Petitioner as enumerated above, we find substance in the contentions as urged on behalf of the Petitioner. We find that no specific finding has been recorded in the impugned order before rejecting the refund application as claimed by the Petitioner, and therefore a reasoned and speaking order is required to be passed by Respondent No. 3 prior to the rejection of refund. The impugned order therefore suffers from the vice of being a non speaking order vis-a-vis the rejection of refund claim of the Petitioner.
8. In light of the aforesaid discussion, we are inclined to pass the following order which will meet the ends of justice:-
ORDER
a. Impugned order dated 24th April 2023 is quashed and set aside.
b. Proceedings stand remanded to Respondent No. 3 for de novo consideration to decide the refund claim of the Petitioner and for a fresh order to be passed in accordance with law and after hearing the parties. The Appellate Authority shall complete the determination within a period of three months from today.
c. All contentions of the parties are expressly kept open.
d. Petition stands disposed of in the aforesaid terms. No costs.
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