Refund claim set aside due to lack of hearing; reassessment ordered under Circular No. 135/05/2020-GST

The HC set aside the Adjudicating Authority's and appellate orders rejecting the refund claim due to non-compliance with natural justice principles, specifically the failure to afford the petitioner an opportunity to be heard. The court noted discrepancies in the petitioner's input tax credit (ITC) claims linked to invoices not reflected in GSTR-2A, referencing Circular No. 135/05/2020-GST limiting refund to ITC supported by supplier-uploaded invoices. Despite flagged issues, no determination of the refundable amount was made, and the petitioner had submitted reconciliations reducing the refund claim accordingly. The matter was remanded to the Adjudicating Authority to reassess the refund claim after hearing the petitioner.

---

---

Issues:
The judgment involves challenging an Order-in-Appeal rejecting refund applications due to mismatch with returns filed by the petitioner and lack of opportunity to be heard.

Details of the Judgment:

Issue 1 - Refund Rejection Grounds:
The petitioner, engaged in manufacturing Polypropylene products, filed refund applications for inverted tax structure. The rejection was based on mismatch with GSTR returns, despite reconciliation efforts by the petitioner.

Issue 2 - Lack of Opportunity to be Heard:
The petitioner contended that they were not given a chance to present their case before the Adjudicating Authority, leading to the rejection of refund applications.

Judgment Analysis:
The Order-in-Appeal highlighted frequent changes in the value of inverted rated supply by the petitioner, including inclusion of non-inverted rated goods. The Appellate Authority emphasized mismatches in turnover values and tax payable on such supplies.

The Court observed that while issues were raised for refund rejection, no detailed examination was conducted to determine the actual refund amount due. The petitioner had submitted reconciliations and reduced refund claims significantly to reflect the accurate amount owed.

It was deemed inappropriate for authorities to reject refund applications solely based on mismatches without allowing the taxpayer to reconcile and provide explanations. The petitioner was not given an opportunity to be heard by the Adjudicating Authority for determining the admissible refund amount.

Judicial Decision:
The impugned Order-in-Appeal and Adjudicating Authority's orders were set aside, and the petitioner's refund applications were restored for a proper determination of refund amount after affording the petitioner a hearing opportunity. The petitioner was granted two weeks to submit a written explanation and reconciliation statements for consideration by the Adjudicating Authority.

---