GST refund rejection quashed for denying mandatory personal hearing and lacking proper reasoning

Delhi HC disposed of petition challenging refund rejection under GST Rules. Court held respondent failed to provide mandatory personal hearing before rejecting refund application, violating natural justice principles. Impugned order lacked proper reasoning, merely stating supplier was "risky" without adequate explanation. Despite petitioner's prompt reply to show cause notice within inadequate 7-day timeframe, hearing wasn't properly conducted. Court directed respondent to grant fresh hearing and pass reasoned speaking order with copy to petitioner before deciding refund application.

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Issues:
Refund rejection order challenge, Compliance with procedural requirements, Opportunity of personal hearing, Reasons for rejection, Timeframe for filing reply, Breach of principles of natural justice.

Analysis:
The petitioner challenged the refund rejection order and sought directions for refund and interest under CGST/SGST. The respondent contended that a personal hearing was fixed but the petitioner did not appear. However, the petitioner disputed this, claiming the information was not accessible on the GST portal. The audit history supported the petitioner's claim of no fixed hearing date. The court found the rejection flawed as the respondent failed to grant a reasonable opportunity for a hearing, as mandated by Rule 92 of the CGST Rules.

The petitioner argued that the rejection lacked valid grounds and violated the principles of natural justice. The respondent's rejection was solely based on the supplier being reported as 'risky', which the court found insufficient. The petitioner applied for a refund for export-related taxes, complying with the reply timeframe despite being shorter than required. The court noted the absence of a personal hearing and ordered the rejection to be set aside.

The court directed the respondent to conduct a fresh hearing, issue a notice to the petitioner, and pass a speaking order within two weeks post the hearing. The judgment emphasized the importance of complying with procedural requirements, granting a fair opportunity for a hearing, and providing valid reasons for rejection in accordance with the law. The writ petition was disposed of accordingly, ensuring a fair and just resolution in the matter.

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