The Hon’ble Jammu & Kashmir High Court in Navneet R. Jhanwar v. State Tax Officer and Ors. [WP (C) No. 443/2021, dated March 17, 2021] quashed the refund rejection order passed by the Revenue Authority rejecting the claim for refund without giving an opportunity of being heard and remanded back the matter for passing an order afresh after putting proper show cause notice and affording a reasonable opportunity of being heard. Held that, grounds on which the refund rejection order passed were not proposed in the show cause notice nor the opportunity of personal hearing was provided to the assessee. Thus, it is a clear case of violation of principle of natural justice and proviso to Rule 92(3) of the Central Goods and Services Tax Rules, 2017 (CGST Rules).
Navneet R. Jhanwar (“the Petitioner”) having become entitled for refund of excess tax paid in terms of Section 54 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) submitted a refund application in FORM-GST-RFD-01 before the State Tax Officer (“the Respondent”), wherein the Respondent instead of directing the refund issued a Show Cause Notice (“SCN”) calling upon the Petitioner to show cause as to why the refund claim should not be rejected for the reason that the claim for refund is belated having been filed after the expiry of two years from the relevant date, as per explanation 2 in Section 54 of the CGST Act and that in the instant case the period had expired in April, 2020.
Subsequently the reply to SCN was filed by the Petitioner explaining the delay. Relied upon Notification No.35/2020-Central Tax, dated April 3, 2020 and Notification No.55/2020-Central Tax, dated June 27, 2020, whereby on account of lockdown due outbreak of corona virus pandemic, time limit/due date for various compliances was extended upto August 31, 2020. The explanation on delay by the Petitioner was accepted and accordingly, the refund application of the Petitioner was processed.
However, the Respondent without serving further SCN upon the Petitioner, passed the refund rejection order dated December 2, 2020 (“Refund rejection order”) on the grounds that were not proposed in the SCN and no opportunity of hearing was provided regarding the same.
Being aggrieved by Refund rejection order, the Petitioner has filed this petition.
Whether the Refund rejection order can be passed without giving an opportunity of being heard?
The Hon’ble Jammu & Kashmir High Court in WP (C) No. 443/2021, dated March 17, 2021 held as under:
Rule 92(3) of the CGST Rules:
“(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 provisions 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 an opportunity of being heard.”
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