Violation of natural justice in adjudication can’t be cured by sufficiency in appellate proceedings: HC

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Case Details: Chandni Crafts v.Union of India – [2023] 148 taxmann.com 164 (Rajasthan)

Judiciary and Counsel Details

Arun Bhansali & Ashok Kumar Jain, JJ.
Anjay Kothari, Mukesh Gurjar & Amit Sharma for the Petitioner.
Kuldeep Vaishnav for the Respondent.

Facts of the Case

The petitioner claim a refund of accumulated input tax credit on account of the export of goods under LuT in terms of the provision of Section 54(3) of CGST Act, 2017. The adjudicating authority partially sanctioned the refund claim and rejected the balance without providing the opportunity of being heard and issuing the notice under Rule 92(3) of CGST rules, 2017. Aggrieved by the order, the petitioner filed an appeal which was rejected by the commissioner (Appeals) on the grounds that the opportunity of being heard was given to the petitioner.

Aggrieved by the order of both Adjudicating Authority and Appellate Authority appellant filed the writ petition before High court of Rajasthan.

High Court Held

The Honourable High court observe that, as per Rule 92(3), which provides that proper officer if satisfied for the reasons to be recorded in writing that whole or any part of refund is inadmissible, then proper officer shall issue a notice in Form GST RFD-08 to the applicant thereafter applicant to reply within 15 days of issuing notice in Form GST RFD-09. After considering the reply, proper officer issue order in Form GST RFD-06 sanctioning or rejecting the refund whether in full or in part. The Proviso to Rule 92(3) further emphasizes that refund shall not be rejected without giving the applicant an opportunity of being heard.

Further Honorable High court states,it is well settled that failure of natural justice in the authority of first instance cannot be cured by sufficiency of natural justice in the appellate authority. Moreover, in Madras High Court judgement, it was concluded that hearing is mandatory before rejecting any application of refund and where a refund application is rejected without hearing, then the refund application submitted by Petitioner is required to be considered afresh.

Thus, HC held that wherein the principles of natural justice have been violated by the adjudicating authority and the appellate authority only on account of the fact that it had provided an opportunity of hearing, did not interfere with the order of the adjudicating authority, both the orders cannot be sustained. Hence writ petition filed by the petitioner is allowed and the matter is remanded back to the Adjudicating Authority to follow the the provisions of Rule 92(3) of the CGST rules.

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