2022 (10) TMI 1219 - HC - GST

HC sets aside refund claim rejection for violating natural justice principles under Section 172(7)(b)

BMW INDIA PVT. LTD. Versus ASSISTANT COMMISSIONER, CGST, CHENNAI AND OTHERS

The Madras HC set aside the rejection of petitioner's refund claim due to violation of natural justice principles. The court found that the petitioner's ... Violation of principles of natural justice - petitioner claim nor dealt in proper manner - rejection of request for refund - HELD THAT:- The petitioner's claim has not been dealt with in a proper manner. The detailed contentions raised by the petitioner in the refund claim have not been specifically adverted to or discussed in light of either the CC Rules or Section 172(7)(b), specifically referred to in the refund application. Moreover, the petitioner ought to have heard in person prior to the impugned order having been passed, which has not been done despite the petitioner having, at para 13 of the refund claim, specifically sought an opportunity of personal hearing prior to disposal of the application. The impugned order is thus set aside and remanded for de novo hearing and disposal, in accordance with law. The officer in the remand proceedings shall test the eligibility of the petitioner to the credit at the outset and render a categoric finding in this regard. The provisions of Section 142 shall thereafter be applied to determine the refund sought. Such exercise shall be completed within a period of eight weeks from date of receipt of this order. Petition disposed off. Issues:Challenge to order rejecting refund request for import of motor vehicles in CKD condition, appeal before CESTAT, remittance of amount including CVD and SAD, rejection of refund application, eligibility to CENVAT credit, interpretation of Section 142(7)(b) of CGST Act, applicability of CC Rules, contention on refund under GST regime, proper consideration of refund claim, need for personal hearing, remand for de novo hearing, new claim on transition of credit.Analysis:1. The petitioner challenged an order rejecting its refund request for importing motor vehicles in CKD condition. The proceedings involved a show cause notice on concessional duty, leading to an order confirming demand of differential customs duty, penalty, interest, and redemption fine. The petitioner appealed to CESTAT, which partially upheld the demand, prompting the petitioner to remit a significant sum, including CVD and SAD, and seek a refund.2. The petitioner's refund application was based on eligibility to CENVAT credit under CC Rules and Section 142(7)(b) of the CGST Act. The petitioner contended that irrespective of the appeal's outcome, it was entitled to the refund. The petitioner highlighted the distinction between Sections 140 and 142 of the GST regime, emphasizing the claim for cash refund of eligible CENVAT credit under Section 142(7)(b).3. The Court noted the petitioner's argument that its right to refund was protected under Section 174 of the CGST Act, safeguarding rights acquired under the erstwhile law. However, the Authority had erroneously applied Section 142(7)(a) instead of (7)(b). The respondent contested the petitioner's eligibility to CENVAT credit, arguing that observations in the impugned order did not constitute admission.4. After considering the rival contentions, the Court found that the petitioner's claim had not been properly addressed. The refund claim's detailed contentions were not adequately discussed in light of CC Rules and Section 142(7)(b). The Court set aside the impugned order for de novo hearing, emphasizing the need for a personal hearing before disposal.5. The Court directed the officer in the remand proceedings to assess the petitioner's eligibility for credit and apply Section 142 to determine the refund within eight weeks. Additionally, the petitioner was allowed to make a new claim regarding the transition of credit based on a recent judgment, to be considered by the officer in accordance with the law during the remand proceedings.6. The Court disposed of the writ petition without costs, instructing a fresh assessment of the refund claim, proper consideration of eligibility, and a new opportunity for a personal hearing. The judgment highlighted the importance of correctly applying the relevant provisions of the law to determine the petitioner's entitlement to the refund.This comprehensive analysis covers the issues raised in the judgment, including the legal arguments presented by the parties, the interpretation of relevant statutory provisions, and the Court's decision to remand the matter for further consideration in light of the petitioner's contentions.