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of <h1>Refund Claim to be Processed; Court Criticizes Unfounded Invoice Apprehensions and Emphasizes Procedural Fairness.</h1> <h3>M/s BALAJI EXIM Versus COMMISSIONER CGST AND ORS</h3> M/s BALAJI EXIM Versus COMMISSIONER CGST AND ORS - TMI Issues involved:The issues involved in the judgment are clarification regarding the processing of a refund application under Section 54 of the Central Goods and Services Tax Act, 2017, and the permissible actions by the respondents after a court order directing the processing of the refund application.Clarification regarding refund processing:The respondents sought clarification on processing the petitioner's application for refund of input tax credit including cess, following a court direction. The respondents restarted scrutinizing the application and issued a show cause notice requiring further documents/proofs. The respondents found the documents provided by the petitioner insufficient, leading to a request for clarification on processing the refund under Section 54 of the CGST Act.Judicial review of refund application rejection:The petitioner's refund application was initially rejected by the respondents based on apprehensions regarding fake invoices from a supplier. The petitioner appealed this rejection, and the Appellate Authority upheld the rejection. However, the High Court reviewed the rejection and found it based on mere apprehension without concrete evidence of fake invoices or non-export of supplies. Consequently, the High Court directed the respondents to process the petitioner's refund claim.Procedural fairness in refund application examination:The High Court emphasized that a tax payer's refund application must be examined thoroughly, and if further clarification is needed, a show cause notice should outline all grounds for potential rejection. The tax payer should have the opportunity to respond to the allegations and provide necessary material. Once this process is completed, the concerned officer must issue a final order clearly stating the reasons for acceptance or rejection of the refund claim.Appellate authority's role and finality of proceedings:The Appellate Authority has the power to confirm, modify, or annul the decision on a refund application but cannot remand the matter back to the adjudicating authority for a fresh consideration. This ensures finality in the proceedings and indicates the legislative intent to conclude matters at the appellate stage without further adjudication. In this case, the respondents' re-issuance of a show cause notice after the High Court's order was deemed impermissible.Permissible actions by respondents post-court order:While the respondents were granted liberty to take action if they found material warranting proceedings against the petitioner, such actions should not involve re-adjudicating the refund application. If any wrongful claim is discovered, the respondents can initiate appropriate proceedings under Sections 73 and 74 of the CGST Act. The judgment disposed of the application accordingly, emphasizing the need for adherence to legal procedures and finality in decisions.
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