Infosys Limited vs. The Deputy Commissioner Of SGST (Stu-3)

Fleard Mr. T.Sruyanarayana, leamed counsel 1br the petitioner and Mr.L.Venkateshwar Rao, learned counsel representing Mr.K.Raji Reddy, learned Senior Standing Counsel for the Comrnercial Tax Deparlurent.

Issue relates to re.jection of claim ol'relund olthe petitionet.

Petitioner is engaged in the business ol'exporting software and information tecirnology services. In connection with the export business of the petitioner, input tax paid on input services and capital goods gets accumulated as unutilized credit in the books of account of the petitioner. As a result, petitioner has been filing refund claims for refund of utilized input tax credit under Section 54(3) of the Telangana State Goods and Services Tax Act, 2017 read, with Section 5 (3) of the Central Goods and Services Tax Act,2017 (CGST Act) and Section 20(xiii) o1' the lntcgratecl Goods ancl Scrviocs l-ax Act,

Referring to Rule 92(3) of the Centrai Goods and Services Tax Rules, 2017 (CGST Rules), leamed counsel for the petitioner submits that when a claim fbr refund is made and if the proper officer is satisfied for reasons to be recorded in writing that the claimed refund is not acLnissible or is not payable, then he is required to issue notice in the prescribed fomr, in which event' the clain.rant has to furnish a reply. 'l'he proper officer is under an obligation to consider such reply before accepting the claim of retuncl or rejccting sr"rcir claim As per the proviso, no application lor refund shall be rejected without giving the applicant an oppoftunity of being heard' In this connectiot.r' leamed counsel for the petitioner has placed reliance on a Division Bench decision of the Bombay High Court in BA CONTINUUM INDIA (P) LIMITED v. UNION OF INDIAI'

Section 54 of the CGST Acr deals with refund of tax Sub-section (l) says that any person claiming refund of any tax and intercst rna1, rrake an application bcfbrc the expiry of nvo As per sub-seclion (5), il orr receipt of any such application, the proper officer is satisfied that the whole or part o1' the amount claimed as relund is rel'undable, he may lral(e an order accordingly. In terms of sub-sectior-r (7), the proper ollcer shall issue thc ordcr under sub-section (5) within 60 days from the date of receipt of the 9. Chapter X of the CGSI Rules deals with refund. Rule 89 forn.ring part ofChapter X provides for filing ofapplication for refund of tax, interest etc., in thc prescribed clectlonic firrn'r. Rulc 92 rvhich is also part ol- Cihapter X dcals rvith an ordel sanctit:rrring relund Sub-r'u Ie (3) o1' Rulc 9) hereunder: is lclcvant anci the samc is cxtracted Rule 92- Order sanctioning refund - (1) ' t2) (3) Where the proper officer is satisfied, for reasons to be recorded in writing, that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in Form GST RFD-08 to the applicant, requiring him to furnish a reply in FORM GST RFD-09 within a period of fifteen days of the receipt of such notice and after considering the reply,.make an order in FORIV GST RFD-06 sanchoning the amount of refund in whole or part, or rejecting the said refund claim and the said order shall be made available to .. 1.. years lrorn the relevant date in the prescribed l'orm arrd rlanner. application, complete in all respects.

From the above, it is evident that in a case where the proper officer is satisfied for reasons to be recorded in writing that the whore or any part of the amount claimed as refund is not admissible or is not payable, he shall issue notice to the applicant requiring filing of reply within 15 days of receipt of notice and after considering the reply make an order sanctioning the amount of refund in whole or.in parl or rejecting the refirnd claim which order shalr be made avairable to the applicant. As per lhe proviso, an application rbr retLrnd shall nor be rejected without giving the applicant an opporrunity ot.being heard. Therelore. therc is a clear legal rnandate that if an application fbr relirnd is ro bc rc'jected. rhe same can only bc done alier uiving the applicanr an opportunity of being hear<i. I l. The expression ,opporlunity of being heard, is not an expression of empty formality. It is a part of the well-recognized principle of audi alteram partem which forms the fulcrum of natural justice and is central to fair procedure. The principle is that no one should be condemned unheard_ It is not necessary to delve deep into the expression save and except to say that by way o1. juclicial pronouncements the said expression has been made central to the decision making process, breach ol which would be construed to be violation or'thc principles of natural .justice thus adverscl,v aff.ecting

When the law reqlrires thar no application tbr refund shali bc re.Jected withotit grvrng the applicant an opportlrn it\ ol'being h ea rcl. the same cannot be substituted by telephonic conversations and exchange o. e-,ails' J'rris is ,rore so in the case o1. a claim for refund where no tirne_limit is fixed vis_d-vis rejection ol. clain_r. Under sub- section (7) ol. section 54, a time_limit of 60 days is prescribed for making of aa order allowing claim of refund; but that period of 60 days would commence frorn the date of receipt of the application complete in all respects without there being a corresponding provision for rejection of application not complete in all respects.

In BA CONTINUUM INDIA (p) LIMITBD (supra), the Bombay High Court had elaborately dealt with the aforesaid provision and, in the lacts and circuntstances of that case, catre to the conclusion that as no hear-ing was grantecl to the petitioner, rejection of.refund order would be in violation of the proviso to sub_rule (3) ol Rule 92 of the CGST Rules and also in violation ol the principJes of.natural justice. The contention advanced by the Revenue about availability of alternative remedy ofappeal was repelled on the ground that an order, which is in violation oi. principles of natural justice, would be non est in law. It is settled law that if there is violation of the principles of natural justice, then the High Coun wili invoke its extraordinarv : :;5::

Consequently, we set aside the impugned memo dated 05.03.2019 in W.P.No.527 of 2019 and letter dated i3'09'2019 in W.P.No.616 of 2020 and direct the respondent to hear afresh applications of the petitioner for refund within a period of two months from the date of receipt ola copy of this order by the respondent after giving an opportunity of being heard to the petitioner' All contentions are kept open. 1 5. Writ petitions are allowed to the extent indicatecl above'

Miscellaneous applications, ifany pending, shallstand closed. 11 . No costs. I To, I- B.SATYAVATHI ASSISTANT REGISTRAR ,// SECTION OFFICER One fair copy to THE HON'BLE SRI JUSTICE UJJAL BHUYAN (For His Lordship's Kind Perusal) AND One fair copy to THE HON'BLE Dr. JUSTICE CHILLAKUR SUMALATHA (For Her Lordship's Kind Perusal)

The Under Sgcr.glary, Union of lndia, Ministry of Law, Justice and Company Affairs, New Delhi.

The Secretary, Telangana Advocates Association Library, High Court for the State of Telangana at Hyderabad. ! Qn" QQ to !r! K. Raghavendra Rao, Advocate [OpUC]

One CC to Srr K Raii Reddy, Senlor S.C. for Commercial Tax [OpUC]

Two CD Coptes

One Spare Copy cHR/ U At-