Refund rejection without Rule 92(3) notice and a non-speaking ITC order were set aside for fresh reconsideration.

Refund rejection of zero-rated supply claims could not be sustained where no notice under Rule 92(3) of the CGST Rules was issued before disallowance, because the claimant was deprived of the opportunity to respond to the proposed grounds of rejection. The appellate order was also unsustainable as it gave no clear, reasoned basis for invoking Section 17(5)(b) of the CGST Act or for denying input tax credit claims, including CAM and catering charges. The refund rejection and appellate orders were set aside to that extent, and the matter was remitted for fresh notice and reconsideration in accordance with law.

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Issues: (i) Whether rejection of the refund claims could be sustained when no notice under Rule 92(3) of the Central Goods and Services Tax Rules, 2017 was issued before disallowance; (ii) whether the impugned appellate order could stand when it did not clearly explain the applicability of Section 17(5)(b) of the Central Goods and Services Tax Act, 2017 to the disputed input tax credit claims.

Issue (i): Whether rejection of the refund claims could be sustained when no notice under Rule 92(3) of the Central Goods and Services Tax Rules, 2017 was issued before disallowance.

Analysis: The refund claims related to zero-rated supplies under Section 16 of the Integrated Goods and Services Tax Act, 2017. The refund rejection was made without issuing the notice contemplated by Rule 92(3), which is meant to set out the reasons for proposed rejection and afford the claimant an opportunity to respond. In the absence of such notice, the claimant was denied an effective opportunity to meet the proposed grounds of rejection.

Conclusion: The rejection could not be sustained and was liable to be set aside.

Issue (ii): Whether the impugned appellate order could stand when it did not clearly explain the applicability of Section 17(5)(b) of the Central Goods and Services Tax Act, 2017 to the disputed input tax credit claims.

Analysis: The appellate authority referred to Section 17(5)(b) and also stated that the eligibility conditions for availing input tax credit under Section 16 had not been satisfied, but the order did not disclose a clear or reasoned basis for those conclusions. The absence of clear reasoning made the order unsustainable, particularly where the disputed items included CAM charges and catering charges and the claim had been rejected without a proper opportunity to respond.

Conclusion: The appellate order was liable to be set aside.

Final Conclusion: The refund rejection and appellate orders, to the extent they disallowed the petitioner's claims, were set aside and the matter was remitted for fresh notice and reconsideration in accordance with law.

Ratio Decidendi: Refund rejection affecting substantive entitlement cannot be sustained without the notice and opportunity mandated by the governing refund procedure, and a non-speaking appellate order lacking clear reasons for denying input tax credit is legally unsustainable.

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