GST refund denial set aside for breaching natural justice, new grounds beyond notice and ignored hearing adjournment request

The HC held that the rejection of the registered person's refund claim for excess tax paid was vitiated by violation of principles of natural justice. While the authority accepted applicability of the SC's limitation-extension orders, it rejected the claim on a new ground, namely non-reflection of excess payment in GSTR-3B or GSTR-9, which had not been set out in the show cause notice. Additionally, the authority failed to consider the assessee's request for adjournment of personal hearing. The HC set aside the refund rejection order dated 25 July 2022 and remanded the matter to the authority for fresh consideration after granting proper opportunity of hearing.

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Issues involved:
The issues involved in the judgment are the delay in filing the appeal and the challenge against the rejection of a refund application.

Delay in filing the appeal:
The Court noted a delay of 149 days in filing the appeal but found that sufficient cause was shown for the delay. Consequently, the delay in filing the appeal was condoned.

Challenge against rejection of refund application:
The appellant had challenged the rejection of their refund application, which was dismissed on the grounds of not availing alternate remedies under the CGST Act. The appellant contended that the rejection of the refund claim was based on a ground not mentioned in the show-cause notice, violating principles of natural justice. Additionally, the appellant's request for postponing the personal hearing was not considered.

The Court held that the refund application should be reconsidered, providing an opportunity for the appellant to be heard. The order rejecting the refund application was set aside, and the matter was remanded back to the authority for fresh consideration. The appellant was directed to submit a reply regarding the excess payment not being shown in the returns within 15 days. The authority was instructed to schedule a fresh date for a personal hearing and pass orders in accordance with the law.

The Court clarified that the issue of the refund application being time-barred was decided in favor of the appellant and cannot be reopened based on the current order. The connected application was disposed of with no costs awarded.

Separate Judgement:
The judgment was delivered by the Hon'ble Chief Justice T.S. Sivagnanam, with agreement from Mr. Justice Supratim Bhattacharya.

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