c

Case Law Details

Case Name : Infosys Limited Vs Deputy Commissioner of SGST (Telangana High Court)
Appeal Number : W.P.Nos.527 & 616 of 2020
Date of Judgement/Order : 05/11/2021
Related Assessment Year :

Infosys Limited Vs Deputy Commissioner of SGST (Telangana High Court)

In a case 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, he shall issue notice to the applicant requiring filing of reply within 15 days of receipt of notice and after considering the reply make an order sanctioning the amount of refund in whole or in part or rejecting the refund claim which order shall be made available to the applicant. As per the proviso, an application for refund shall not be rejected without giving the applicant an opportunity of being heard. Therefore, there is a clear legal mandate that if an application for refund is to be rejected, the same can only be done after giving the applicant an opportunity of being heard.

The expression ‘opportunity of being heard’ is not an expression of empty formality. It is a part of the well-recognized principle of audi alteram partem which forms the fulcrum of natural justice and is central to fair procedure. The principle is that no one should be condemned unheard. It is not necessary to delve deep into the expression save and except to say that by way of judicial pronouncements the said expression has been made central to the decision making process, breach of which would be construed to be violation of the principles of natural justice thus adversely affecting the decision making process; a ground for invoking the power of judicial review.

When the law requires that no application for refund shall be rejected without giving the applicant an opportunity of being heard, the same cannot be substituted by telephonic conversations and exchange of e-mails. This is more so in the case of a claim for refund where no time-limit is fixed vis-à-vis rejection of claim. Under sub­section (7) of section 54, a time-limit of 60 days is prescribed for making of an order allowing claim of refund; but that period of 60 days would commence from the date of receipt of the application complete in all respects without there being a corresponding provision for rejection of application not complete in all respects.

In BA CONTINUUM INDIA (P) LIMITED (supra), the Bombay High Court had elaborately dealt with the aforesaid provision and, in the facts and circumstances of that case, came to the conclusion that as no hearing was granted to the petitioner, rejection of refund order would be in violation of the proviso to sub-rule (3) of Rule 92 of the CGST Rules and also in violation of the principles of natural justice. The contention advanced by the Revenue about availability of alternative remedy of appeal was repelled on the ground that an order, which is in violation of principles of natural justice, would be non est in law. It is settled law that if there is violation of the principles of natural justice, then the High Court will invoke its extraordinary jurisdiction under Article 226 of the Constitution of India notwithstanding the availability of the alternative remedy of appeal.

 Consequently, we set aside the impugned memo dated 05.03.2019 in W.P.No.527 of 2019 and letter dated 13.09.2019 in W.P.No.616 of 2020 and direct the respondent to hear afresh applications of the petitioner for refund within a period of two months from the date of receipt of a copy of this order by the respondent after giving an opportunity of being heard to the petitioner.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Though W.P.No.616 of 2020 is not listed today, we have requisitioned the record of the said case, as the subject matter of the said writ petition is identical to that of W.P.No.527 of 2020 and this order will dispose of both W.P.Nos.527 and 616 of 2020.

2. Heard Mr. T.Sruyanarayana, learned counsel for the petitioner and Mr.L.Venkateshwar Rao, learned counsel representing Mr.K.Raji Reddy, learned Senior Standing Counsel for the Commercial Tax Department.

3. Issue relates to rejection of claim of refund of the petitioner.

4. Petitioner is engaged in the business of exporting software and information technology services. In connection with the export business of the petitioner, input tax paid on input services and capital goods gets accumulated as unutilized credit in the books of account of the petitioner. As a result, petitioner has been filing refund claims for refund of utilized input tax credit under Section 54(3) of the Telangana State Goods and Services Tax Act, 2017 read with Section 54(3) of the Central Goods and Services Tax Act, 2017 (CGST Act) and Section 20(xiii) of the Integrated Goods and Services Tax Act, 2017 (IGST Act). The two petitions relate to two such claims for the period April, 2018 to June, 2018 and July, 2018 to March, 2019.

5. By the common refund rejection order dated 22.10.2019, respondent rejected such claim for refund on the ground that petitioner had not submitted the required documents in hard copies for verification.

6. Referring to Rule 92(3) of the Central Goods and Services Tax Rules, 2017 (CGST Rules), learned counsel for the petitioner submits that when a claim for refund is made and if the proper officer is satisfied for reasons to be recorded in writing that the claimed refund is not admissible or is not payable, then he is required to issue notice in the prescribed form, in which event, the claimant has to furnish a reply. The proper officer is under an obligation to consider such reply before accepting the claim of refund or rejecting such claim. As per the proviso, no application for refund shall be rejected without giving the applicant an opportunity of being heard. In this connection, learned counsel for the petitioner has placed reliance on a Division Bench decision of the Bombay High Court in BA CONTINUUM INDIA (P) LIMITED v. UNION OF INDIA1.

7. Despite notice being issued in both the writ petitions on 08.01.2020 and 09.01.2020 respectively, respondent has not filed counter affidavit.

8. Section 54 of the CGST Act deals with refund of tax. Sub-section (1) says that any person claiming refund of any tax and interest may make an application before the expiry of two years from the relevant date in the prescribed form and manner. As per sub-section (5), if on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly. In terms of sub-section (7), the proper officer shall issue the order under sub-section (5) within 60 days from the date of receipt of the application, complete in all respects.

9. Chapter X of the CGST Rules deals with refund. Rule 89 forming part of Chapter X provides for filing of application for refund of tax, interest etc., in the prescribed electronic form. Rule 92 which is also part of Chapter X deals with an order sanctioning refund. Sub-rule (3) of Rule 92 is relevant and the same is extracted hereunder:

“Rule 92- Order sanctioning refund.-

(1)  * * * * * * * *

(2)   * * * * * * * * *

(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.”

10. From the above, it is evident that in a case 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, he shall issue notice to the applicant requiring filing of reply within 15 days of receipt of notice and after considering the reply make an order sanctioning the amount of refund in whole or in part or rejecting the refund claim which order shall be made available to the applicant. As per the proviso, an application for refund shall not be rejected without giving the applicant an opportunity of being heard. Therefore, there is a clear legal mandate that if an application for refund is to be rejected, the same can only be done after giving the applicant an opportunity of being heard.

11. The expression ‘opportunity of being heard’ is not an expression of empty formality. It is a part of the well-recognized principle of audi alteram partem which forms the fulcrum of natural justice and is central to fair procedure. The principle is that no one should be condemned unheard. It is not necessary to delve deep into the expression save and except to say that by way of judicial pronouncements the said expression has been made central to the decision making process, breach of which would be construed to be violation of the principles of natural justice thus adversely affecting the decision making process; a ground for invoking the power of judicial review.

12. When the law requires that no application for refund shall be rejected without giving the applicant an opportunity of being heard, the same cannot be substituted by telephonic conversations and exchange of e-mails. This is more so in the case of a claim for refund where no time-limit is fixed vis-à-vis rejection of claim. Under sub­section (7) of section 54, a time-limit of 60 days is prescribed for making of an order allowing claim of refund; but that period of 60 days would commence from the date of receipt of the application complete in all respects without there being a corresponding provision for rejection of application not complete in all respects.

13. In BA CONTINUUM INDIA (P) LIMITED (supra), the Bombay High Court had elaborately dealt with the aforesaid provision and, in the facts and circumstances of that case, came to the conclusion that as no hearing was granted to the petitioner, rejection of refund order would be in violation of the proviso to sub-rule (3) of Rule 92 of the CGST Rules and also in violation of the principles of natural justice. The contention advanced by the Revenue about availability of alternative remedy of appeal was repelled on the ground that an order, which is in violation of principles of natural justice, would be non est in law. It is settled law that if there is violation of the principles of natural justice, then the High Court will invoke its extraordinary jurisdiction under Article 226 of the Constitution of India notwithstanding the availability of the alternative remedy of appeal.

14. Consequently, we set aside the impugned memo dated 05.03.2019 in W.P.No.527 of 2019 and letter dated 13.09.2019 in W.P.No.616 of 2020 and direct the respondent to hear afresh applications of the petitioner for refund within a period of two months from the date of receipt of a copy of this order by the respondent after giving an opportunity of being heard to the petitioner. All contentions are kept open.

15. Writ petitions are allowed to the extent indicated above.

16. Miscellaneous applications, if any pending, shall stand closed.

17. No costs.

Download Judgment/Order

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Whatsapp

taxguru on whatsapp WHATSAPP GROUP LINK

Join Taxguru Group on Telegram

taxguru on telegram TELEGRAM GROUP LINK

More Under Goods and Services Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

January 2022
M T W T F S S
 12
3456789
10111213141516
17181920212223
24252627282930
31