Explore the recent Bombay High Court judgment in M/s. Wallem Shipmanagement (India) Pvt. Ltd. v. The Union of India & Ors, highlighting the significance of fair opportunities and adherence to natural justice in the rejection of GST refund applications. Understand the implications for businesses facing Show Cause Notices during the pandemic and the court’s commitment to ensuring a just and reasonable process. Stay informed about the legal principles governing such cases.
The Bombay High Court recently passed a landmark judgment in the case of M/s. Wallem Shipmanagement (India) Pvt. Ltd. v. The Union of India & Ors [Writ Petition no.3460 of 2021 dated July 11, 2023], concerning the rejection of a refund application. The Court’s decision has a significant bearing on the principle of natural justice, particularly as it relates to the timely response to a Show Cause Notice (SCN) during the pandemic period.
Facts:
M/s. Wallem Shipmanagement (India) Pvt. Ltd (“the Petitioner”) is engaged in the business of placement and supply service of personnel. The Petitioner filed the refund application dated March 30, 2020.
A Show Cause Notice (“the SCN”) was issued by the Revenue Department (“the Respondent”) on September 30, 2020 to show cause that why refund application should not be rejected.
The Petitioner vide letter dated October 14, 2020 requested for the extension of time period for filing a reply of the SCN stating that the assessee is being old man and due to Pandemic, it take some time to file a reply. The Respondent has granted only three days extension to the Petitioner for filing a reply against the 2 week time period sought by the Petitioner.
The Respondent after 3 days vide an order dated October 20, 2020 (“the Impugned Order”) rejected the refund application of the Petitioner on the grounds of non reply of the SCN.
Aggrieved by the Impugned Order, the Petitioner filed a writ before the Hon’ble Bombay High Court praying to quash the impugned order being violative of principle of natural justice.
Issue:
Whether the refund application can be rejected without giving a proper time for reply of SCN?
Held:
The Hon’ble Bombay High Court in Writ Petition no.3460 of 2021 held as under:
- Noted that, the reason furnished by the Petitioner to seek extended time to file a reply to the SCN on account of pandemic was a sufficient reason.
- Noted that, the Respondent gave only three days to file the reply, which cannot be termed as reasonable time or an adequate opportunity of a hearing to the Petitioner.
- Held that, the Petitioner was not granted the proper opportunity for replying of the SCN.
- Set aside the Impugned order being violative of principle of natural justice.
Conclusion: The ruling by the Bombay High Court underscores the importance of fairness and adherence to the principles of natural justice. It highlights the judiciary’s sensitivity to extraordinary circumstances like the pandemic and sets a precedent for ensuring that reasonable time and opportunity are given to parties to respond to legal notices. By setting aside the Impugned Order, the Court reinforced the fundamental legal principle that justice must not only be done but also seen to be done. The decision is a significant contribution to jurisprudence related to procedural fairness in the time of a global health crisis.
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