In a significant legal development, the Bombay High Court recently delivered a judgment on the case of Bhumika Highstreet Pvt. Ltd. vs Assistant Commissioner. The petitioner, a goods supplier through “FLIPKART,” sought a refund under section 54 of the CGST Act, 2017. However, the Assistant Commissioner’s rejection order raised concerns of procedural irregularities and a lack of natural justice.
Background: The petitioner received a show cause notice on 18.01.2023, proposing the rejection of the refund application. A personal hearing was scheduled for 31.01.2023, with a one-month window for the petitioner to file a reply. Surprisingly, the order was passed on 03.02.2023, disregarding the petitioner’s submission filed on 02.02.2023.
Court’s Observations: The Bombay High Court, in its judgment, highlighted that the order was issued without due consideration of the petitioner’s submissions and amounted to a violation of natural justice. Recognizing the non-speaking nature of the order, the court set aside both the show cause notice and the rejection order.
Legal Implications: The court directed the issuance of a fresh show cause notice, emphasizing the need for adherence to legal procedures. The judgment underscores the importance of fair hearings and thorough consideration of submissions in matters of tax refunds.
Conclusion: In conclusion, the Bhumika Highstreet case serves as a reminder of the judiciary’s commitment to upholding principles of natural justice. The quashing of the impugned order and the directive for a fresh show cause notice exemplify the court’s dedication to ensuring a fair and just adjudication process. This case holds implications for future proceedings related to GST refunds and establishes a precedent for the proper conduct of tax-related hearings.
The matter was argued by Ld. Counsel Bharat Raichandani
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. By this petition filed under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:-
“a. To issue Writ of Certiorari or any other appropriate Writ, Order or Direction quashing the Refund Rejection Order No. MC/DIV-VI/RFD-06/AC/BHUMIKA/77/2022-23 dated 03.02.2023 passed by the Respondent herein;
b. To issue Writ of Certiorari or any other appropriate Writ, Order or Direction quashing the Show Cause Notice No. ZI2701230219637 dated 18.01.2023 issued by the Respondent herein.
c. To issue Writ of Mandamus or any other appropriate Writ, Order or Direction directing the Respondent to grant refund of INR 97,04,185/- claimed by the Petitioner under Section 54 of the Central Goods and Services Tax Act, 2017;
d. To issue order(s), direction(s), writ(s) or any other relief(s) as this Hon’ble Court deems fit and proper in the facts and circumstances of the case and in the interest of justice;
e. To award Costs of and incidental to this application be paid by the Respondents.”
2. The basic issue raised for our consideration is as to whether the Assistant Commissioner of CGST Division VI, Mumbai Central Commissionerate is correct in law, in passing the impugned order dated 03 February, 2023 rejecting the refund application as filed by the petitioner.
3. We note that the show cause notice was issued on 18 January, 2023 calling upon the petitioner to show cause as to why the petitioner’s refund application be not rejected on the grounds as set out in the show cause notice. The petitioner was also called upon to appear before the said officer on 31 January, 2023. The petitioner had a serious quarrel on the grounds as set out in the show cause notice. It appears that the petitioner submitted its reply to the show cause notice on 02 February, 2023, and the impugned order was immediately passed on 03 February, 2023. It does not appear that a fresh notice was issued to the petitioner to appear for hearing.
4. The grievance of the petitioner is that none of the contentions as urged by the petitioner in its reply filed to the show cause notice are addressed in passing the impugned order. In such context, our attention is drawn to paragraph 5 of the impugned order, contents of which according to Mr. Raichandani, can hardly be called to be any reasons to reject, any of the contentions as urged by the petitioner, as also without considering the documents which were placed on record of the Assistant Commissioner.
5. Learned counsel for the revenue, considering the contentions as urged on behalf of the petitioner, fairly accepting that the impugned order fails to consider materials, makes a statement that the respondents be permitted to withdraw the impugned order with liberty to issue a fresh show cause notice, on the refund application, to be adjudicated in accordance with law, after considering the reply of the petitioner as also after granting an opportunity of hearing to the petitioner.
6. In view of such stand as taken on behalf of the respondents, in our opinion, further adjudication of the petition on the issues as urged in the petition would not arise. We accordingly dispose of the present petition by the following order:-
i. The impugned order dated 03 February, 2023 stands withdrawn as per statement as made on behalf of the respondents and accordingly stands set aside as withdrawn.
ii. The respondents are directed to issue a fresh show cause notice to the petitioner within a period of two weeks from today.
iii. Reply to the show cause notice be placed on record of the Designated Officer within two weeks thereafter.
iv. An appropriate date to hear the petitioner on the show cause notice be communicated to the petitioner, and the petitioner be heard on all materials/documents.
v. A reasoned order be passed by the Designated Officer within a period of two weeks from the date of hearing.
vi. All contentions of the parties are expressly kept open.
vii. The petition is disposed of in the aforesaid terms. No costs.