M/S Hitachi Energy INDIA Limited vs. Joint Commissioner Of Commercial Taxes (Appeals-6)
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The petitioner, M/s. Hitachi Energy India Limited, filed a refund application on March 31, 2024. The Assistant Commissioner (3rd respondent) initially sanctioned the refund on April 15, 2024, and forwarded it for prior approval. The Joint Commissioner (2nd respondent) pointed out six discrepancies on May 13, 2024. The Assistant Commissioner, after considering the petitioner's reply, again sanctioned the refund on June 11, 2024. However, the Joint Commissioner reiterated the same discrepancies on August 17, 2024. Subsequently, the Assistant Commissioner rejected the refund claim. The petitioner's appeal before the Joint Commissioner (Appeals-6) (1st respondent) was dismissed on the ground that the 1st respondent was of the same cadre as the 2nd respondent. The petitioner seeks to quash these orders and direct the sanction of the refund.
Held
The Court held that the Assistant Commissioner erred in rejecting the refund claim based on the Joint Commissioner's communication, which merely reiterated the same discrepancies that had already been answered in favour of the petitioner by the Assistant Commissioner on two prior occasions. The Court found this rejection to be erroneous. Furthermore, the Court held that the Appellate Authority (1st respondent) erred in dismissing the appeal solely on the ground of being of the same cadre/rank as the Joint Commissioner (2nd respondent). The Court reasoned that the Appellate Authority, functioning as a quasi-judicial authority, should have reconsidered and re-appreciated the appeal on its merits, independent of any observations or findings of the Joint Commissioner, who was acting in an administrative capacity. The similarity in rank could not be a basis for summarily rejecting the appeal. Consequently, the Court set aside the order of the Appellate Authority and remitted the matter back for fresh consideration on merits. The Court directed the Appellate Authority to provide a reasonable opportunity to the petitioner and pass an independent order without being influenced by the Joint Commissioner's communications.
Key Issues
1. Whether the Assistant Commissioner erred in rejecting the refund claim of the petitioner solely based on the reiterated discrepancies pointed out by the Joint Commissioner, despite having previously sanctioned the refund twice after considering the petitioner's replies? 2. Whether the Appellate Authority (1st respondent) erred in dismissing the petitioner's appeal on the ground of being of the same cadre/rank as the Joint Commissioner (2nd respondent), without considering the appeal on its merits? Petitioner's arguments: The petitioner contends that the Assistant Commissioner erroneously rejected the refund claim based on the Joint Commissioner's communication, which reiterated discrepancies already addressed in the petitioner's favour. The petitioner argues that the Appellate Authority wrongly dismissed the appeal based on a similarity in cadre/rank between the Appellate Authority and the Joint Commissioner, failing to appreciate that the Appellate Authority should have considered the appeal on merits as a quasi-judicial authority. Revenue's arguments: The learned AGA for the respondents supported the impugned orders and submitted that the petition is liable to be dismissed.
Sections Cited
Article 226
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Cause title — parties, addresses and appearances
ORAL ORDER In this petition, the petitioner seeks the following reliefs:
"WHEREFORE, it is respectfully prayed that this Hon'ble Court may be pleased to:
a) issue a writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ or order or direction under Article 226 of the Constitution of India quashing the impugned Order- In-Appeal No. GST/RFD/AP. No. 635/2024-25 dated 31.12.2024 passed by Respondent No.1I enclosed at Annexure-A;
b) issue a writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ or order or direction under Article 226 of the Constitution of India quashing the impugned Refund Rejection Order No. ACCT/LGSTO-075/RFD/12/2024-25 dated 19.08.2024 passed by Respondent No. 3 enclosed at Annexure-B;
c) issue a writ of Mandamus or a Writ in the nature of Mandamus or any other appropriate Writ or order or direction under Article 226 of the Constitution of India directing the Respondents to sanction the refund of Rs.22,32,37,425/- along with interest in favour of the Petitioner;
d) pass such further order(s) and other reliefs as the nature and circumstances of the case may require. NC: 2025:KHC:17643
Heard learned counsel for the petitioner and learned Additional Government Advocate for respondents and perused the material on record.
A perusal of the material on record would indicate that the petitioner having filed a refund application dated 31.03.2024, the 3rd respondent - Assistant Commissioner passed an order dated 15.04.2024 sanctioning refund infavour of petitioner and forwarded the same to the 2nd respondent - Joint Commissioner for seeking prior approval.
In response to the same, 2nd respondent - Joint Commissioner issued a communication dated 13.05.2024 intimating 06 discrepancies in the refund application of the petitioner and calling upon the 3rd respondent - Assistant Commissioner to consider the same.
In pursuance of the aforesaid communication addressed by the Joint Commissioner to the Assistant Commissioner, the Assistant Commissioner issued a show cause notice dated 15.05.2024 proposing to reject the entire refund claim on the basis of the aforesaid 06 discrepancies pointed out by the Joint Commissioner - 2nd respondent vide letter dated 13.05.2024. NC: 2025:KHC:17643 The petitioner having submitted a detailed reply dated 05.06.2024 to the said show cause notice, the 3rd respondent once again came to conclusion that the petitioner was entitled to refund and sanctioned the same vide order dated 11.06.2024 and forwarded the same to the 2nd respondent - Joint Commissioner for prior approval.
It is the grievance of the petitioner that despite the 3rd respondent - Assistant Commissioner holding all issues infavour of the petitioner and forwarding the same to the Joint Commissioner only for approval, the 2nd respondent once again issued a communication dated 17.08.2024 intimating the very same discrepancies that he had already pointed out in his communication dated 13.05.2024 which were answered infavour of the petitioner by the Assistant Commissioner who sanctioned the refund infavour of the petitioner vide order dated 11.06.2024. It is also contended that though the 3rd respondent committed an error in rejecting the refund claim of the petitioner merely on the basis of the communication by the Joint Commissioner who has erroneously reiterated the very same discrepancies already answered infavour of the petitioner, the Appeal filed by the petitioner before 1st NC: 2025:KHC:17643 respondent - Appellate Authority was also dismissed on the sole ground that the 1st respondent - Joint Commissioner was of the same cadre/rank as of the 2nd respondent which is incorrect since the 1st respondent is an Appellate Authority/Quasi Judicial Authority against the order passed by the 3rd respondent and merely because the 3rd respondent had rejected the refund on the basis of a communication addressed by the 2nd respondent, the said circumstance could not have been made a basis by the 3rd respondent to reject the refund claim of the petitioner, which was answered by the 3rd respondent, not once, but twice in his favour. It is therefore, he submitted that the impugned orders passed by respondent Nos. 1 & 3 deserve to be set aside and refund claim of the petitioner deserve to be allowed.
Per contra, learned AGA for respondents would support the impugned orders and submits that the petition is liable to be dismissed..
A perusal of the material on record would indicate that as rightly contended by the learned counsel for petitioner, the 06 discrepancies pointed out by the 2nd respondent- Joint NC: 2025:KHC:17643 Commissioner in his communication dated 13.05.2024 were answered by the 3rd respondent infavour of the petitioner.
A perusal of the material on record would indicate that in his first order dated 15.05.2024, the 3rd respondent had come to the conclusion that the petitioner was entitled the sanction of refund and had forwarded the same to the 2nd respondent for prior approval. So also pursuant to the 2nd respondent addressing a communication dated 13.05.2024, the 3rd respondent took into account the reply submitted by petitioner and once again came to the conclusion vide order dated 11.06.2024 that the petitioner was entitled to sanction of refund. Under these circumstances, merely because the 2nd respondent had issued a communication dated 17.08.2024 raising the very same discrepancies which he had raised in his earlier letter dated 13.05.2024, the said communication could not have been made basis or relied upon by the 3rd respondent in rejecting refund claim of the petitioner which is erroneous and the same deserves to be set aside.
In this context, it is relevant to state that however, in the appeal filed by the petitioner before the 1st respondent - Appellate Authority, the sole reason for the 1st respondent - NC: 2025:KHC:17643 Appellate Authority to uphold the rejection order of the Assistant Commissioner was by coming to the conclusion that the 1st respondent was in the same cadre/rank as that of the 2nd respondent - Joint Commissioner. However, the 1st respondent failed to consider and appreciate that in so far as orders passed by the 3rd respondent - Assistant Commissioner are concerned, the 1st respondent - Joint Commissioner functions or act as an Appellate Authority who would be entitled to reconsider, re-appreciate and revisit the appeal filed by petitioner on merits without being influenced by any observation/finding recorded by the 2nd respondent and mere similarity or commonality in the rank / cadre between 1st and 2nd respondent could not have been made the basis to summarily reject the appeal filed by petitioner especially, when the 2nd respondent was functioning or acting in his administrative capacity while the 1st respondent was functioning or acting as an Appellate Authority against the orders passed by the 3rd respondent.
Under these circumstances, I deem it just and appropriate to set aside the impugned order at Annexure-A passed by 1st respondent and remit the matter back to the 1st respondent NC: 2025:KHC:17643 for reconsideration afresh in accordance with law and by issuing certain directions in this regard.
In the result, pass the following:
ORDER (i) The petition is hereby allowed. (ii) Impugned order in Appeal dated 31.12.2024 Annexure-A is hereby set aside. (iii) The Appeal filed by petitioner is hereby restored to the file of 1st respondent/Appellate Authority. (iv) Matter is remitted back to the 1st respondent for reconsideration afresh in accordance with law. (v) 1st respondent/Appellate Authority shall provide sufficient and reasonable opportunity to the petitioner herein and reconsider the matter afresh and pass appropriate order independently in accordance with law, without being influenced by the communication, letters, findings, observations etc., passed or issued by the 2nd respondent and in accordance with law. NC: 2025:KHC:17643 (vi) The 1st respondent - Appellate Authority shall dispose of the proceedings within a period of 03 months from the dated of appearance of the petitioner before the 1st respondent/Appellate Authority. (vii) The petitioner undertakes to appear before 1st respondent on 19.05.2025. (viii) Liberty is reserved infavour of petitioner to submit additional pleadings, documents etc, which shall be considered by 1st Appellate Authority in accordance with law. (S.R.KRISHNA KUMAR) JUDGE
tsn* List No.: 1 Sl No.: 20
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.