2023 (7) TMI 1231 - HC - GST

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

M/s. Shivbhola Filaments Private Limited Versus Assistant Commissioner CGST & Anr.

The HC set aside the Adjudicating Authority's and appellate orders rejecting the refund claim due to non-compliance with natural justice principles, ... Violation of principles of natural justice - rejection of refund claim - Non-affording of opportunity to be heard by the Adjudicating Authority - rejection of refund on the ground that the petitioner had changed the value of the inverted rated supply of goods substantially - HELD THAT:- In SCNs it has been mentioned that some invoices included for the purpose of arriving at the amount of 'Net lTC' not found in GSTR-2A returns for the relevant period. In this regard, reference made to Circular No. 135/05/2020-GST dated 31.03.2020 wherein it has been clarified that the refund of accumulated ITC shall be restricted to the ITC as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. Hence, the refund of accumulated ITC shall not be available to the appellant of those invoices the details of which are not reflected in GSTR-2A of the applicant at the time of filing of refund. In view of the above discussions, mis-match in Net lTC, Inverted rated supply of goods and tax payable on such supplies and adjusted total turnover clearly established and the appellant failed to reconcile the mis-match documentary or otherwise. It is apparent that although the Appellate Authority had flagged issues on the basis of which certain amount of refund as claimed by the petitioner was required to be rejected, however, no exercise was conducted to determine the extent of the refund claimed, which was untenable. The petitioner had submitted reconciliation statements, and had reduced its claims for refund substantially to restrict the same to the quantum of refund, that according to the petitioner, was due. In the present case, the petitioner was not heard by the Adjudicating Authority and no such exercise for determining the amount of refund admissible was undertaken. It is considered apposite to set aside the impugned Order-in-Appeal dated 18.11.2021 as well as the orders dated 31.12.2020 passed by the Adjudicating Authority (annexed with the petition as Annexure P/4) and restore the petitioner’s applications for refund before the Adjudicating Authority for determining the amount of refund payable to the petitioner after affording the petitioner an opportunity to be heard - petition disposed off. 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.