The Court dealt with a petition challenging the rejection of a refund claim under CGST Rules, 2017. The petitioner argued that there was non-compliance with the mandatory procedural requirement of Rule 92(3), which provides for notice and hearing before rejecting a refund claim. The Court set aside the refund rejection orders, instructing the authorities to follow Rule 92(3) in deciding the refund claims afresh.

1. Introduction and Rule Issuance
   The Court heard both parties' arguments and issued a rule, making it returnable immediately based on mutual consent.

2. Refund Application and Rejection
   The petitioner applied for a refund, which was partially granted and partially rejected by the Respondents through the orders in Exhibit-C and Exhibit-D.

3. Petitioner's Grievance
   The petitioner’s main grievance was that the rejection of refunds did not comply with Rule 92(3) of the CGST Rules, which mandates a notice and opportunity for a hearing before rejection.

4. Relevant Provision: Rule 92(3)
   The rule requires the proper officer to issue a notice (Form GST RFD-08) if a refund is inadmissible, allow a reply (Form GST RFD-09), and issue a final order (Form GST RFD-06), while ensuring that no rejection occurs without a hearing.

5. Non-compliance with Rule 92(3)
   The Respondents claimed they provided a hearing, but it was not substantiated. Rule 92(3) was not properly followed, as no show cause notice was issued.

6. Court's Order
   The Court set aside the impugned orders to the extent they denied refunds, instructing the Respondents to comply with Rule 92(3) and reconsider the refund applications.

7. Undertakings and Period Limitation
   The Respondent argued that the petitioner gave undertakings not to press for refunds for certain periods except July to September 2022. The petitioner did not dispute the undertakings but expressed concerns about their implications.

8. Petitioner's Submissions on Undertakings
   The petitioner argued that the undertakings were submitted under pressure, fearing they might lose even the undisputed refunds.

9. Respondent's Argument on Voluntary Undertakings
   The Respondents maintained that the undertakings were voluntary and the petitioner benefited from them, as amounts were credited to the petitioner’s electronic credit ledger.

10. Court's Stance on Undertaking Dispute
    The Court did not adjudicate the controversy surrounding the undertakings but limited itself to setting aside the refund denials based on procedural non-compliance.

11. Final Decision and Directions
    The impugned orders were set aside, and the matter was restored to the concerned Respondent to decide the refund applications following Rule 92(3) and the law. All contentions remain open for consideration.

12. Execution of the Order
    The order is to be acted upon based on an authenticated copy without any additional costs.

Acts and Sections Discussed:

• Central Goods and Services Tax (CGST) Rules, 2017
  • Rule 92(3): Pertains to the procedure for refund rejection, requiring a show cause notice, reply, and a final order before any refund denial.

Ratio:

The Court's decision centered around procedural fairness in refund rejections. Non-compliance with Rule 92(3), particularly the requirement to provide notice and a hearing before denying a refund, invalidates the rejection order. The Court also maintained that all parties' contentions remain open for consideration, leaving the question of undertakings unresolved.

Subjects:

GST Refund, CGST Rules, Procedural Compliance

GST, Refund Denial, CGST Rules, Rule 92(3), Show Cause Notice, Opportunity of Hearing, Undertaking