Unreasoned refund disallowance and uniform wastage percentage cannot stand; fresh consideration after notice and hearing was directed.

Refund disallowance under the wastage and capital goods heads was held unsustainable where no reasons were given for the partial rejection and no notice or hearing was afforded. The use of a uniform 2% wastage rate was found impermissible because wastage or invisible loss must be assessed on the facts of each manufacturing process, not by blanket percentage. The rectification applications under the Tamil Nadu Value Added Tax Act, 2006 could not be rejected merely for want of a reason to reopen, as the original orders themselves disclosed an error apparent on the record. The matter was remanded for fresh consideration after notice, objections and personal hearing.

---

---

Issues: Whether the orders disallowing part of the refund claim under the heads of wastage and capital goods, and the orders rejecting rectification applications, were sustainable when no reasons were assigned and no opportunity of hearing was granted; and whether adoption of a uniform percentage of wastage was permissible.

Analysis: The refund orders had disallowed a substantial part of the claim without explaining the basis for the disallowance or the adoption of a uniform 2% wastage percentage. The rectification applications under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 could not be rejected merely on the ground that there was no reason to reopen the refund claim, since the original orders themselves lacked reasons and had resulted in partial disallowance without notice or hearing. The decision in Interfit Techno Products Ltd. was applied to hold that wastage or invisible loss cannot be fixed on a uniform percentage across manufacturing processes and must be examined on the facts of each case. The absence of reasons and denial of hearing rendered the disallowance liable to correction as an error apparent on the face of the record.

Conclusion: The rejection of rectification and the partial disallowance of refund under wastage and capital goods heads were unsustainable and were set aside. The matter was remanded for fresh consideration after issuance of notice, receipt of objections, and grant of personal hearing.

Final Conclusion: The assessee succeeded to the extent of reopening of the disallowed refund claim, with the matter sent back for reconsideration in accordance with law.

Ratio Decidendi: A refund disallowance made without reasons, notice, or hearing and based on an unexamined uniform percentage of wastage is liable to be interfered with and remanded for fresh consideration.

---