GST refund rejection invalid for denial of statutory reply time and hearing under mandatory procedure

Rule 92(3) of the GST refund procedure requires the proper officer to issue notice, allow the prescribed time to reply, consider the reply, and grant an opportunity of hearing before rejecting a refund claim. Where only 7 days were given instead of 15 days and the applicant was not heard despite repeated requests, the refund rejection was procedurally invalid. A later rectification order did not cure the initial breach of mandatory procedure and natural justice. The rejection and rectification orders were set aside and the matter remanded for fresh consideration in compliance with the statutory refund process.

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Issues: Whether the refund rejection order and the rectification order were liable to be set aside for non-compliance with Rule 92(3) and denial of opportunity of hearing.

Analysis: Rule 92(3) requires the proper officer, before rejecting a refund claim, to issue notice, grant time to reply, consider the reply, and afford an opportunity of hearing before passing the final order. The petitioner was given only 7 days instead of the prescribed 15 days and, despite repeated requests, was not heard before the refund rejection order was passed. The subsequent rectification order did not cure the defect arising from the initial procedural non-compliance.

Conclusion: The refund rejection order and the rectification order were rightly set aside, and the matter was remanded for fresh consideration after granting the petitioner the prescribed time and a hearing.

Final Conclusion: The dispute was reopened before the original authority for reconsideration in accordance with the mandatory refund procedure and audi alteram partem.

Ratio Decidendi: A refund rejection under the GST refund procedure cannot stand when the applicant is denied the mandatory statutory time to reply and an opportunity of hearing.

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