GST refund rejection requires hearing and recorded reasons; unreasoned denial was quashed and remanded for fresh adjudication.

A GST refund rejection could not be sustained where the applicant was denied the statutory opportunity of hearing required by the refund rules and section 75(4), and the adverse order was also unreasoned. The High Court held that these mandatory procedural safeguards, including recorded reasons before final rejection, are part of natural justice and must be followed in refund adjudication. As the defects went to the validity of the decision-making process, the impugned order was quashed and the matter remanded for fresh adjudication after hearing the applicant and recording reasons.

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Issues: (i) Whether the refund rejection order could be sustained when no opportunity of hearing was granted under the governing GST provisions. (ii) Whether the impugned order, being unreasoned, was liable to be quashed and the matter remanded for fresh adjudication.

Issue (i): Whether the refund rejection order could be sustained when no opportunity of hearing was granted under the governing GST provisions.

Analysis: The refund order was passed under the GST framework without granting the applicant an opportunity of hearing. The proviso to the relevant refund rule expressly requires that a refund claim shall not be rejected without affording such hearing, and the statutory hearing requirement under section 75(4) was also not complied with. The absence of any effective challenge to this factual position reinforced the defect in the order.

Conclusion: The order could not be sustained for breach of the hearing requirement and principles of natural justice.

Issue (ii): Whether the impugned order, being unreasoned, was liable to be quashed and the matter remanded for fresh adjudication.

Analysis: The impugned order also failed to record reasons. In GST refund adjudication, rejection of a claim must be supported by recorded reasons and the claimant must be given an opportunity to reply before a final adverse order is made. Since those mandatory procedural safeguards were not followed, the proper course was to set aside the order and direct fresh consideration after de novo adjudication.

Conclusion: The order was quashed and the matter was remanded for fresh decision after hearing and recording reasons.

Final Conclusion: The refund dispute was returned to the adjudicating authority for reconsideration in accordance with law, with mandatory observance of hearing and reasoned decision-making.

Ratio Decidendi: A GST refund rejection cannot stand unless the applicant is given a statutory opportunity of hearing and the adverse decision is supported by recorded reasons; failure to comply warrants quashing and remand for fresh adjudication.

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