Court Orders Fresh Hearing After Authorities Deny Personal Hearing Due to Heavy Rains
In a significant ruling, the Bombay High Court has quashed the refund rejection order and show cause notice issued to Infinx Services Private Limited by the GST authorities, citing a violation of the principles of natural justice. The decision, delivered by the bench of Justices G.S. Kulkarni and Aarti Sathe, emphasized the necessity of affording a personal hearing before rejecting refund applications as mandated under Rule 92(3) of the Central Goods and Services Tax Rules, 2017.
The case arose when Infinx Services, a Mumbai-based IT and IT-enabled services provider, faced rejection of its refund claim of ?5,08,93,798 for zero-rated supplies made without IGST payment. The authorities had issued a show cause notice and a subsequent rejection order without accommodating the company's request to reschedule a hearing due to heavy rains in Mumbai, which prevented attendance.
Senior Advocate Prakash Shah, representing Infinx, argued that the rejection violated natural justice principles, as the company was denied an opportunity for a personal hearing despite a legitimate request. Furthermore, the timeline given for responding to the show cause notice was shorter than the 15 days mandated by Rule 92(3), further compounding the procedural irregularities.
The court found merit in these arguments and underscored that authorities must adhere to procedural fairness before passing adverse orders. It ordered that the show cause notice and rejection order be set aside and directed the authorities to issue a fresh show cause notice, conduct a de novo hearing, and pass a speaking order within three months.
This ruling reinforces the judiciary's commitment to ensuring procedural fairness and protecting taxpayers' rights under the GST framework.
Bottom Line:
Goods and Services Tax - Refund rejection order and show cause notice issued without affording personal hearing to the petitioner - Held, violation of principles of natural justice - Proviso to Rule 92(3) of the Central Goods and Services Tax Rules, 2017 mandates opportunity of being heard before rejection of refund application.
Statutory provision(s): Central Goods and Services Tax Act, 2017 Section 54, Central Goods and Services Tax Rules, 2017 Rule 92(3)
Infinx Services Private Limited v. Union of India, (Bombay)(DB) : Law Finder Doc id # 2887215
