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Refund application cannot be rejected without giving a proper opportunity

Bimal jain
Court Annuls Order Denying Refund to Company, Cites Unreasonable Response Time Violating Natural Justice Principles. The Bombay High Court set aside an order from the Adjudicating Authority that denied a refund to a company involved in personnel placement services. The company had filed a refund application, but the Revenue Department issued a Show Cause Notice during the pandemic, granting only a three-day extension for a response instead of the requested two weeks. The court ruled that this did not provide a reasonable opportunity for the company to reply, violating the principles of natural justice. Consequently, the court annulled the order rejecting the refund application. (AI Summary)

The Hon’ble Bombay High Court in the matter of WALLEM SHIPMANAGEMENT (INDIA) PVT. LTD. VERSUS THE UNION OF INDIA & ORS. - 2023 (7) TMI 643 - BOMBAY HIGH COURT set aside the order of Adjudicating Authority of not granting refund and held that the assessee should have given time to file reply since the notice was issued during the pandemic period.

Facts:

M/s. Wallem Shipmanagement (India) Pvt. Ltd (“the Petitioner”) is engaged in the business of placement and supply service of personnel. The Petitioner filed the refund application dated March 30, 2020.

A Show Cause Notice (“the SCN”) wasissued by the Revenue Department (“the Respondent”) on September 30, 2020 to show cause that why refund application should not be rejected.

The Petitioner vide letter dated October 14, 2020 requested for the extension of time period for filing a reply of the SCN stating that the assessee is being old man and due to Pandemic, it take some time to file a reply. The Respondent has granted only three days extension to the Petitioner for filing a reply against the 2 week time period sought by the Petitioner.

The Respondent after 3 days vide an order dated October 20, 2020 (“the Impugned Order”) rejected the refund application of the Petitioner on the grounds of non reply of the SCN.

Aggrieved by the Impugned Order, the Petitioner filed a writ before the Hon’ble Bombay High Court praying to quash the impugned order being violative of principle of natural justice.

Issue:

Whether the refund application can be rejected without giving a proper time for reply of SCN?

Held:

The Hon’ble Bombay High Court in WALLEM SHIPMANAGEMENT (INDIA) PVT. LTD. VERSUS THE UNION OF INDIA & ORS. - 2023 (7) TMI 643 - BOMBAY HIGH COURTheld as under:

  • Noted that, the reason furnished by the Petitioner to seek extended time to file a reply to the SCN on account of pandemic was a sufficient reason.
  • Noted that, the Respondent gave only three days to file the reply, which cannot be termed as reasonable time or an adequate opportunity of a hearing to the Petitioner.
  • Held that, the Petitioner was not granted the proper opportunity for replying of the SCN.
  • Set aside the Impugned order being violative of principle of natural justice.

(Author can be reached at [email protected])

Goods and Services Tax - GST
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