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of <h1>Tax authority's refund rejection quashed for exceeding show-cause notice scope without proper opportunity</h1> Gujarat HC quashed tax authority's refund rejection order for exceeding scope of show-cause notice. The authority rejected ITC refund application citing ... Rejection of refund application - application rejected on the ground of non-furnishing of required documents - documents in the form of the purchase order received from the foreign buyer, copy of insurance, proof of outside supplies and the bank statement of each account maintained in different banks were not furnished - Scope of SCN - HELD THAT:- The impugned order in the Form GSD RFD-06 deserves to be quashed and set aside only on one ground and i.e. the impugned order travels beyond the scope of the show-cause notice. The fact is noted that in the impugned order, the authority concerned has gone into minutest of the details of the transactions of the writ-applicant– firm with the other companies. These transactions have been found to be doubtful. In such circumstances, the authority thought fit to reject the claim of the writ-applicant – firm for the refund of the ITC. In the show-cause notice, all that has been stated is that few relevant documents have not been furnished and in the absence of those, it was not possible for the authority to process the application for the refund of the ITC. There is not a single allegation beyond this in the show-cause notice. Upon the documents being furnished by the writ-applicant and while going through those documents, if the authority had any doubts with respect to all such transactions, it was expected of the authority to once-again give an opportunity to the writ-applicant to explain all such alleged dubious transactions. The authority could not have straightway proceeded to pass the impugned order incorporating all the details and taking the writ-applicant – firm by a surprise. The matter is remitted to the authority concerned. The authority concerned shall issue a fresh show-cause notice furnishing all the relevant details including the details with respect to the transactions, which the authority has found to be doubtful so as to enable the writ-applicant– firm to file an appropriate reply and explain all such transactions - application allowed. Issues:- Refund claim under CGST Act, 2017/SGST Act, 2017 rejected beyond scope of show-cause notice.Analysis:1. The petitioner, a Partnership Firm engaged in trading tobacco, filed a writ-application seeking various reliefs related to the rejection of their refund claim under the CGST Act, 2017/SGST Act, 2017.2. A show-cause notice was issued to the firm questioning the lack of certain documents necessary for processing the refund application. The firm responded by furnishing the required documents.3. Despite repeated requests and a previous court order directing the authorities to decide on the matter promptly, the refund application was rejected by the authority in the Form GSD RFD-06, going beyond the scope of the show-cause notice.4. The High Court observed that the rejection order delved into intricate transaction details of the firm with other companies, deeming them doubtful, leading to the rejection of the refund claim.5. The Court noted that the show-cause notice only mentioned the absence of specific documents without any allegations beyond that. The authority should have provided the firm with an opportunity to address any doubts regarding the transactions before passing the rejection order.6. Emphasizing that the authority should have applied its mind to avoid the litigation, the Court allowed the writ-application, quashed the impugned order, and remitted the matter back to the authority.7. The authority was directed to issue a fresh show-cause notice within 15 days, including all relevant details about the transactions in question. The firm was to respond within 8 days, followed by a personal hearing before the authority's final decision.8. The Court mandated the completion of the entire process within three months from the date of the judgment, allowing direct service of the order.This comprehensive analysis of the judgment highlights the key issues, the sequence of events leading to the legal dispute, the court's observations, and the final directives given to the concerned authority to rectify the procedural errors and ensure a fair adjudication process within a specified timeframe.
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