Manufacturer Wins GST Refund Challenge: Procedural Flaws Invalidate Tax Revision Order, Demands Transparent Reconsideration

HC quashed a tax revision order involving GST refund for passenger car manufacturing. The court found procedural irregularities in the order's reasoning, specifically regarding interest and penalty imposition. The matter was remanded for reconsideration, directing the tax authority to provide a reasoned order and personal hearing within two months, with no costs awarded.

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Issues involved: Challenge to order in revision proceedings under the Tamil Nadu Goods and Services Tax Act, 2017.

Summary:

Issue 1 - Revision Proceedings Scope:
The petitioner, engaged in the manufacture and supply of passenger cars, filed a refund application due to accumulation of Input Tax Credit (ITC) as GST was paid at a higher rate on inputs. The revision order was challenged on the grounds that it exceeded the scope of Section 108 of the TNGST Act as the refund claim was made under the law applicable at the time of the application.

Issue 2 - Interest and Penalty Imposition:
The petitioner contested the levy of interest under Section 50(3) of the TNGST Act and the imposition of penalty, arguing that the conclusions lacked supporting reasons and that the refund claim was made in good faith under the law. The impugned order did not provide reasons for the interest and penalty levied.

In response, the Additional Government Pleader argued that the scope of Section 108 of the TNGST Act allowed for revision proceedings in this case. Referring to the amended Rule 89(5) upheld by the Division Bench and the Supreme Court, it was contended that the revision order should not be interfered with.

The petitioner's objections regarding the revision order exceeding its scope, non-leviability of interest under Section 50(3), and unjust penalty imposition were not adequately addressed in the impugned order. Therefore, the court quashed the order and remanded the matter for reconsideration, directing the respondent to provide a reasonable opportunity for a personal hearing and issue a speaking order within two months.

The writ petition was disposed of with no order as to costs, and the connected miscellaneous petition was closed.

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