GST refund application must be processed when department fails to produce actual rejection order despite court directions

The HC held that the petitioner's GST refund application could not be considered rejected where the department claimed rejection via order dated 18.10.2019 but failed to produce the actual order despite court directions. The petitioner had filed refund application on 04.03.2019 and was initially informed of sanction in October 2019, but after 30 months was told of rejection without prior hearing opportunity. The court found the alleged rejection order non-existent in law and directed processing of the original refund application, rejecting the department's contention that a fresh application was required.

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Issues Involved:
1. Legality of the refund rejection order.
2. Entitlement to refund of ITC on export of goods and services.
3. Entitlement to statutory interest on the refundable amount.

Summary:

1. Legality of the Refund Rejection Order:
The petitioner sought the production and quashing of the refund rejection order RFD-06 No. 91 dated 18.10.2019. The court noted that the Respondents admitted the absence of this order in the official record. Despite this, the Respondents argued that the petitioner should have filed an appeal under Section 107(1) of the CGST Act. The court found that no decision had been taken on the refund application due to the non-existence of the rejection order and directed the Respondents to take a decision on the refund application within four weeks.

2. Entitlement to Refund of ITC on Export of Goods and Services:
The petitioner applied for a refund of unutilized ITC for the period 2017-18, which was initially communicated as sanctioned but later informed as rejected without any official order. The court held that the rejection was done without following the principles of natural justice and Rule 92(3) of the CGST Rules, which requires an opportunity of hearing before rejecting a refund application. The court directed the Respondents to process the refund claim based on the original application dated 04.03.2019.

3. Entitlement to Statutory Interest on the Refundable Amount:
The petitioner claimed statutory interest on the refundable amount of Rs. 2,90,86,294/- @ 6% per annum from the expiry of 60 days from the date of receipt of the application for refund. The court referenced the Supreme Court's judgment in Union of India vs. Tata Chemicals, which held that the right to interest follows as a matter of course when money is retained without right. The court ruled that the petitioner is entitled to interest under Section 56 of the CGST Act.

Conclusion:
The court declared the alleged refund rejection order as non-existent and directed the Respondents to process the refund claim along with statutory interest within three weeks. The petitioner's application was allowed and disposed of without any order as to costs.

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