Show cause notice limits refund disputes when new factual grounds cannot be raised later in appeal.

A refund sanction under Notification No. 17/2009-ST was upheld because the Department could not challenge it on a factual ground not raised in the show cause notice. The notice alleged only non-furnishing of the chartered accountant certificate and non-submission of relevant invoices and bills; it did not allege that the respondent had exported a lesser quantity than shown in the shipping bills. As the show cause notice is the foundation of the proceedings, a new ground could not be introduced in appeal. The sanctioned refund was therefore sustained.

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Issues: Whether the Department could challenge the refund sanction on a ground not alleged in the show cause notice, and whether the respondent was entitled to the sanctioned refund under Notification No. 17/2009-ST dated 07.07.2009.

Analysis: The refund claim was examined with reference to the conditions in the notification and the supporting invoices and bills. The only allegations in the show cause notice related to non-furnishing of the chartered accountant certificate for claims exceeding 0.25% of FOB value and non-submission of relevant invoices and bills. The notice did not allege that the respondent had exported a lesser quantity than that shown in the shipping bills. Since the show cause notice is the foundation of the proceedings, the Department could not raise a new factual ground in appeal that was never put to the respondent.

Conclusion: The refund sanction could not be assailed on a ground absent from the show cause notice, and the finding sustaining refund of Rs.53,73,949/- was upheld.

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