M/S.World Home Textiles Inc vs. The Additional Commissioner (Appeals)

Held

The Court held that Rule 92(3) of the Central Goods and Services Tax Rules, 2017, clearly mandates that an application for refund cannot be rejected without giving the applicant an opportunity of being heard. The Court noted that the first respondent (Appellate Authority) had confirmed that no hearing was afforded to the petitioner by the second respondent (Assistant Commissioner). Despite this acknowledgment, the Appellate Authority dismissed the appeal erroneously. The Court found that both the second respondent and the first respondent had arbitrarily rejected the petitioner's refund application without applying their minds to the mandatory requirement of a hearing under Rule 92(3). Therefore, the Court quashed both the impugned order dated March 27, 2019, and the order dated August 20, 2020. The matter was remanded back to the second respondent for fresh consideration on merits and in accordance with law, after affording a fair hearing to the petitioner, including the right of personal hearing, within twelve weeks.

Facts

The petitioner, M/s. World Home Textiles Inc., filed a writ petition challenging an order-in-appeal dated August 20, 2020, passed by the Additional Commissioner (Appeals), which upheld an order dated March 27, 2019, passed by the Assistant Commissioner of GST and Central Excise. The latter order rejected the petitioner's application for a GST refund. The petitioner contended that the refund application was rejected by the Assistant Commissioner without affording them a proper opportunity of hearing, contrary to Rule 92(3) of the Central Goods and Services Tax Rules, 2017. The petitioner further argued that the Appellate Authority, while acknowledging the lack of hearing, failed to remand the matter for fresh consideration and erroneously confirmed the rejection.

Key Issues

1. Whether the rejection of the petitioner's refund application by the Assistant Commissioner of GST and Central Excise, without affording an opportunity of hearing, is in violation of the principles of natural justice and Rule 92(3) of the Central Goods and Services Tax Rules, 2017? 2. Whether the Additional Commissioner (Appeals), by confirming the rejection order despite acknowledging the lack of hearing, acted contrary to Rule 92(2) of the Central Goods and Services Tax Rules, 2017, and failed to provide adequate relief to the petitioner? Petitioner's Arguments: The petitioner argued that Rule 92(3) mandates a hearing before rejecting a refund application. They contended that the Assistant Commissioner failed to provide this opportunity, rendering the rejection order dated March 27, 2019, invalid. Furthermore, the petitioner argued that the Appellate Authority, in its order dated August 20, 2020, confirmed the lack of hearing but incorrectly dismissed the appeal instead of remanding the matter for fresh consideration as required by the rules. Respondents' Arguments: The judgment does not explicitly record arguments made by the respondents. However, the Appellate Authority's order, as quoted in the judgment, mentions that the appellant failed to comply with instructions as provided under a Board's Circular dated March 15, 2018, which resulted in the rejection of their refund claim.