Varian Medical Systems International INDIA PVT LTD vs. The Union Of INDIA

Held

The Court held that the impugned order dated 27th June 2025 suffered from the vice of being a non-speaking order, as it failed to record specific findings before rejecting the Petitioner's refund application. It was also held that the order erroneously concluded the Petitioner was an intermediary service provider without considering their submissions, leading to the rejection of their claim that the services rendered constituted an export. Consequently, the Court found substance in the Petitioner's contention that a reasoned and speaking order was required. The Court quashed and set aside the impugned order and remanded the matter to the Original/Adjudicating Authority for de novo consideration. The Adjudicating Authority was directed to issue a fresh show-cause notice, grant a personal hearing, and pass a reasoned order within three months. All contentions of the parties were expressly kept open.

Facts

The Petitioner, Varian Medical Systems International India Pvt. Ltd., engaged in software development and related services to overseas associated enterprises, filed a refund application for Rs. 12,12,00,656/- (IGST) on 30th April 2025. This refund was sought under Section 20 of the IGST Act, read with Section 54(3) of the CGST Act and Rule 89(4) of the CGST Rules, for services exported without payment of tax under Letter of Undertaking (LUT) during May 2023 to January 2024. Respondent No. 3 issued a show-cause notice on 30th May 2025, proposing rejection of the refund. The Petitioner replied on 10th June 2025, refuting allegations and providing supporting documents. Despite a personal hearing on 11th June 2025, Respondent No. 3 passed an order on 27th June 2025, rejecting the refund claim, stating it was erroneously granted. The Petitioner challenged this order before the High Court.

Key Issues

1. Whether the impugned order dated 27.06.2025, rejecting the Petitioner's refund claim, was passed in violation of the principles of natural justice, specifically by failing to consider the Petitioner's submissions and documents, and thus constituting a non-speaking order, as argued by the Petitioner under Article 226 of the Constitution of India? 2. Whether the Petitioner's services qualify as an export of services under Section 2(6) of the IGST Act, entitling them to a refund of accumulated Input Tax Credit under Section 16 of the IGST Act read with Section 54(3) of the CGST Act, as contended by the Petitioner? Petitioner's Arguments: The Petitioner argued that the impugned order was passed in violation of natural justice as their submissions and documents were not considered, and it erroneously classified their services as intermediary services. They contended they provided services on a principal-to-principal basis to entities outside India, thus qualifying as export of services. They relied on several High Court decisions, including Sundyne Pumps and Compressors India Pvt. Ltd. vs. Union of India, for the principle of remanding matters for de novo consideration when orders are non-speaking. Revenue's Arguments: The Respondent-State, through the learned Addl. G.P., fairly submitted that the proceedings could be remanded to the Adjudicating Authority for reconsideration and a fresh hearing for the Petitioner.