Richie Rich Exim Solutions vs. Commissioner Of CGST Delhi South

Facts

The petitioner, Richie Rich Exim Solutions, filed a writ petition challenging an order dated December 30, 2020, passed by the Assistant Commissioner, Central GST, Delhi South, rejecting its refund application for Rs. 98,54,248/- for September 2020. The petitioner's primary grievance was that the respondent authority failed to provide a personal hearing before rejecting the refund, in contravention of the proviso to sub-rule 3 of Rule 92 of the CGST Rules. The respondent initially contended that a hearing date was fixed and the petitioner failed to appear. However, the petitioner argued that the website details provided by the respondent were inaccessible and relied on the audit history generated by the respondent, which did not show any date fixed for a personal hearing. The refund was rejected solely on the ground that the petitioner's supplier was reported as 'risky'.

Held

The Court held that the respondent authority failed to discharge the onus of proving that a personal hearing was fixed for the petitioner. The audit history, generated by the respondent itself, did not reflect any date fixed for the petitioner's refund application hearing. Consequently, the impugned order rejecting the refund was flawed, as it violated the proviso to sub-rule 3 of Rule 92 of the CGST Rules, which mandates granting the applicant an opportunity of being heard before rejection. The Court also found that the rejection order lacked proper reasoning, as the ground of the supplier being 'risky' did not sufficiently explain why the refund was neither admissible nor payable. The Court noted that while the petitioner had filed a reply within 7 days, which was less than the prescribed 15 days, they did not make a grievance about this timeframe. However, the absence of a personal hearing was established. Therefore, the Court set aside the impugned order and directed the respondent to grant the petitioner a personal hearing, pass a speaking order on the refund application within two weeks of the hearing, and issue a notice for the hearing within ten days.

Key Issues

1. Whether the respondent authority complied with the mandatory requirement of providing a personal hearing to the petitioner before rejecting its refund application, as stipulated in the proviso to sub-rule 3 of Rule 92 of the CGST Rules? 2. Whether the rejection of the refund application solely on the ground that the petitioner's supplier was reported as 'risky' constitutes valid reasoning under sub-rule 3 of Rule 92 of the CGST Rules? Petitioner's arguments: The petitioner argued that no personal hearing was granted, violating the proviso to sub-rule 3 of Rule 92. They contended that the respondent's claim of a fixed hearing date was unsubstantiated, as evidenced by the audit history. Furthermore, the petitioner argued that the rejection order lacked proper reasoning, as the 'risky supplier' ground does not inherently mean the refund is inadmissible or not payable. They also noted that the time provided for reply to the show cause notice was less than the prescribed 15 days. Respondent's arguments: The respondent contended that a personal hearing date was fixed on December 29, 2020, and it was the petitioner who failed to appear. They defended the rejection order based on the position taken therein.