Case Note & Summary
The petitioner, Jacobs Solutions India Pvt. Ltd., is engaged in providing engineering consulting services to its group entities located outside India. During the relevant period, the petitioner exported consulting services without payment of GST, making it eligible to claim a refund of Input Tax Credit (ITC) availed on inputs and input services used for such exports. On 31 December 2021, the petitioner filed a refund application. A show cause notice was issued on 1 February 2022, raising objections primarily on the ground of non-disclosure of invoice details. The petitioner replied to the show cause notice on 14 February 2022. However, by an order dated 22 February 2022, the refund claim was rejected without considering the petitioner's reply and without granting any opportunity of hearing. The petitioner challenged this order by way of a writ petition under Article 226 of the Constitution of India, seeking quashing of the rejection order and a direction to sanction the refund of Rs.11,69,07,326 along with interest. The respondents opposed the petition, arguing that the petitioner had not provided the required details. The court held that the rejection order was passed in violation of the principles of natural justice as the petitioner's reply was not considered and no personal hearing was granted. The court set aside the impugned order and remanded the matter to the respondent No.4 for fresh adjudication, directing that the petitioner be given a reasonable opportunity of hearing and that a speaking order be passed within eight weeks. The court also directed that the amount of Rs.11,69,07,326 deposited by the respondents pursuant to an interim order shall be kept in a fixed deposit and shall abide by the final decision.
Headnote
A) GST - Refund of Input Tax Credit - Export of Services - Section 54 of Central Goods and Services Tax Act, 2017 - The petitioner exported consulting services without payment of GST and claimed refund of ITC. The refund was rejected without considering the petitioner's reply to the show cause notice and without granting a personal hearing. Held that the order was passed in violation of principles of natural justice and the matter was remanded for fresh adjudication (Paras 1-10). B) GST - Show Cause Notice - Opportunity of Hearing - Section 75(4) of Central Goods and Services Tax Act, 2017 - The adjudicating authority failed to provide an opportunity of hearing to the petitioner before rejecting the refund claim. Held that the requirement of a personal hearing is mandatory and its denial vitiates the order (Paras 7-9).
Issue of Consideration
Whether the rejection of the petitioner's refund claim of Input Tax Credit on export of services without providing an opportunity of hearing and without considering the petitioner's reply to the show cause notice is sustainable in law.
Final Decision
The impugned order dated 27.01.2023 (actually 22.02.2022) is quashed and set aside. The matter is remanded to respondent No.4 for fresh adjudication after giving the petitioner a reasonable opportunity of hearing, including a personal hearing. A speaking order shall be passed within eight weeks. The amount of Rs.11,69,07,326 deposited by the respondents pursuant to the interim order shall be kept in a fixed deposit and shall abide by the final decision.
Law Points
- Refund of Input Tax Credit
- Export of Services
- Natural Justice
- Section 54 of CGST Act
- 2017
- Rule 89 of CGST Rules
- Unjust Enrichment
