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GST Refund Claim of Rs. 1.24 Crores Under EPGC Scheme Rejected Without Proper Notice Under Section 54(5) and 56 The HC quashed an order rejecting a GST refund claim of Rs. 1.24 crores filed by an importer under the Export Promotion Capital Goods Scheme. The Deputy ...
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GST Refund Claim of Rs. 1.24 Crores Under EPGC Scheme Rejected Without Proper Notice Under Section 54(5) and 56
The HC quashed an order rejecting a GST refund claim of Rs. 1.24 crores filed by an importer under the Export Promotion Capital Goods Scheme. The Deputy Commissioner had denied the refund citing "Wrong ITC Claim" under section 54(5) read with section 56 of CGST Act, 2017. The court found that this ground was not mentioned in the original show cause notice, denying the petitioner an opportunity to address it. Without ruling on merits, the court directed the authority to reconsider the refund claim following proper procedure within 12 weeks.
Issues: Challenge to order rejecting refund claim under CGST Act based on wrong ITC claim.
Analysis: The petitioner challenged the order dated 13.7.2021 passed by the Deputy Commissioner of State Tax, which treated the refund claim as inadmissible due to a "Wrong ITC Claim" under section 54(5) read with section 56 of the Central Goods and Services Tax Act, 2017. The order followed a show cause notice dated 19.6.2021 related to the refund application filed by the petitioner. The petitioner, an importer under the Export Promotion Capital Goods Scheme, filed a refund application for IGST paid on the import of capital goods in July and August 2017. The refund claim amount was Rs. 1.24 crores filed on 28.12.2019.
The competent authority, in the show cause notice, mentioned reasons for not granting the refund, including that the claim was over two years old, lacked clear grounds, had unclear refund calculation, and incomplete documents. The petitioner, unable to attend the personal hearing due to time constraints, made a representation in response to the notice. However, the impugned order rejecting the refund introduced a new ground not mentioned in the show cause notice, i.e., the wrong ITC claim, denying the petitioner an opportunity to address it.
The Court found the rejection of the refund claim on a new ground not raised in the show cause notice to be a significant flaw. Consequently, the impugned order was quashed, and the refund claim was directed to be reconsidered by the authority following due procedure within 12 weeks. The Court clarified that it did not delve into the merits of the case but focused on the procedural aspect. As a result, the petition was allowed, and the rule was made absolute in the aforementioned terms.
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