M/S. Radiant Entp. P. LTD. And Anr. vs. Jt. Com. CGST And Cx (Appeal-I) And Ors.

Facts

The appellants, M/s. Radiant Enterprises Private Limited and another, filed a writ petition challenging an order dated March 31, 2021, passed by the appellate authority under the CGST Act. The original authority had rejected their refund claim, citing that the tax was paid by M/s. Eveready and not the claimant. The appellants appealed this decision, arguing that as the service recipients who bore the incidence of tax, they were entitled to claim a refund under Section 54 of the CGST Act. The appellate authority framed two issues: (1) whether a service recipient can apply for a refund, and (2) whether the building purchased by the appellants from M/s. Eveready was taxable under GST. While the first issue was decided in favour of the appellants, the second issue, which was suo motu raised by the appellate authority, was decided against them. The learned Single Bench dismissed the writ petition, finding no reason to interfere with the appellate authority's order.

Held

The Court held that the appellate authority erred in framing and deciding the second issue suo motu, as it was not part of the original authority's order and the CGST Act does not provide for a cross-appeal by the revenue in such statutory appeals. The Court found that this action violated the principles of natural justice as the appellants were not put on notice regarding this additional issue. Even if Section 107(2) of the CGST Act was considered, its invocation was not in accordance with the statutory provision. Therefore, the portion of the appellate authority's order on the second issue was quashed. The Court directed the original authority to entertain the appellants' refund application and pass an appropriate order within four weeks. The Court set aside the order of the learned Single Bench and allowed the writ petition.

Key Issues

1. Whether the appellate authority, in an appeal filed by the appellant against a refund rejection order, has the jurisdiction to suo motu frame and decide an issue that was not considered by the original authority, particularly when the CGST Act does not provide for a cross-appeal by the revenue? (Section 107, CGST Act). The appellants argued that the appellate authority cannot put them in a disadvantageous position in their own appeal and that the suo motu framing of the second issue lacked jurisdiction and violated principles of natural justice. The revenue contended that the appellate authority is entitled to go into other issues under Section 107(2) of the CGST Act. 2. Whether the exercise of power under Section 107(2) of the CGST Act by the appellate authority, if invoked, was in accordance with the statutory provision and principles of natural justice, considering the appellants were not put on notice regarding the additional issue? The appellants argued that even if Section 107(2) was invoked, it was not exercised properly as they were not put on notice and the issue was not part of the original authority's order. The revenue argued that the appellate authority is entitled to go into other issues.