M/S.Shree Balamurugan Spinners vs. The State Tax Officer/Commercial Tax Officer

Held

The Court allowed the writ petition on the sole ground that the impugned order rejecting the petitioner's refund claim was mechanically passed without assigning any reason. The Court found that the respondent had rejected the request without properly considering the petitioner's explanation. Consequently, the impugned order was set aside, and the matter was remitted back to the respondent. The respondent was directed to afford an opportunity of personal hearing to the petitioner, consider all defenses placed by the petitioner, and pass a fresh order on merits, taking into account the petitioner's explanation. This fresh order was to be passed within 12 weeks from the date of receipt of a copy of the Court's order. The ratio decidendi is that a refund rejection order must be speaking and based on proper consideration of the taxpayer's submissions and relevant statutory provisions, and a failure to do so warrants remand.

Facts

The petitioner, M/s. Shree Balamurugan Spinners, filed a writ petition challenging an order dated 03.12.2025 (Form GST RFD-06) passed by the respondent, the State Tax Officer/Commercial Tax Officer, Karur. This order rejected the petitioner's refund claim of Rs. 7,59,954/- for the tax period of July 2025. The petitioner argued that the rejection order was arbitrary, non-speaking, and contrary to statutory provisions. They sought to quash the impugned order and direct the respondent to reconsider their refund application (Application Reference Number AA3309250426627, dated 14.09.2025) in accordance with Section 54(3)(ii) of the GST enactments read with Rule 89(5) of the GST Rules, 2017, after affording a reasonable opportunity of physical hearing.

Key Issues

1. Whether the impugned order rejecting the petitioner's refund claim is arbitrary, non-speaking, and contrary to applicable statutory provisions, specifically Section 54(3)(ii) of the GST enactments and Rule 89(5) of the GST Rules, 2017? The petitioner contended that the respondent's order rejecting their refund claim was mechanical and lacked proper reasoning. They argued that the respondent failed to consider the petitioner's explanation and that the order was non-speaking, making it arbitrary and contrary to the law. The petitioner specifically relied on Section 54(3)(ii) and Rule 89(5) of the GST Rules, 2017, for their refund claim and sought a reconsideration after affording a physical hearing. The respondent, represented by the Government Advocate, did not present any specific arguments against the petitioner's claims in the provided judgment text. The judgment notes that both sides were heard.