The Petitioner challenged the rejection of its refund application by the department on the grounds of procedural irregularities and a breach of the Central Goods and Services Tax (CGST) Rules, 2017. The court found that the Petitioner was denied a fair opportunity for a personal hearing, as required under Rule 92(3) of the CGST Rules, and quashed the impugned orders, directing fresh consideration of the refund application.

• Non-compliance with Rule 92(3) of CGST Rules, 2017: The Respondent’s rejection of the refund did not include an adequate opportunity for the Petitioner to present its case, which is a requirement under Rule 92(3).
• Breach of Natural Justice: The court observed that the Petitioner was not given a reasonable chance for a personal hearing before the refund rejection, violating principles of fairness and natural justice.
• Remand for Fresh Consideration: The court ordered that the case be reconsidered, allowing the Petitioner a fair hearing.

1. Introduction of the Case:

   • The court heard counsel from both parties.
   • Rule made returnable immediately.

2. Challenge Against Refund Rejection:

   • The Petitioner challenged the refund rejection orders dated April 25, 2024, which were posted on the department's website.

3. Background of the Refund Application:

   • Petitioner applied for a refund on April 25, 2024, and received a show-cause notice on April 3, 2024, providing 15 days to reply.

4. Petitioner’s Response to Show-Cause Notice:

   • Petitioner replied to the show-cause notice on April 16, 2024, which was uploaded on April 17, 2024.

5. Lack of Personal Hearing Mentioned in Orders:

   • The rejection order, dated April 25, 2024, lacks any reference to a personal hearing, which is required under Rule 92(3).

6. Discrepancy in Hearing Details:

   • Respondent’s counsel claimed a hearing was provided on April 8, 2024, with a screenshot of FORM-GST-RFD-01 as proof.

7. Rule 92(3) of the CGST Rules, 2017:

   • Sets out that refund applications should not be rejected without giving the applicant a reasonable opportunity to be heard.

8. Inconsistency in Hearing Date:

   • The court found it implausible for a hearing to occur on April 8, 2024, given that the Petitioner was instructed to respond by April 17, 2024.

9. Court’s Findings:

   • The rejection orders violated Rule 92(3) and natural justice principles by denying a proper hearing.

10. Court Order to Quash and Remand:

    • The rejection orders dated April 25, 2024, were set aside.
    • The matter was remanded to Respondent No. 3 to reconsider the refund application, ensuring a fair hearing.

11. Concluding Remarks:

    • Rule made absolute; no costs imposed; authenticated copy directed for action.

Acts and Sections Discussed:

• CGST Act and Rules, 2017
  • Rule 92(3): Procedure for sanctioning refund and mandatory hearing before rejection.

Ratio Decidendi:

The court held that the principles of natural justice are integral to any proceedings, especially concerning tax refunds. The CGST Rules necessitate a fair hearing before a refund is denied, and failing to provide this opportunity renders the rejection order legally untenable.

Subjects:

Taxation, GST Refunds, Principles of Natural Justice

Refund Rejection, CGST Rules, Procedural Fairness, Natural Justice, Judicial Review