2025 (3) TMI 105 - HC - GST

GST refund rejection overturned due to inadequate hearing opportunity under Rule 96(4) export transactions

Shree Ramdoot Metloys Private Limited & Anr. Versus Assistant Commissioner of State Tax, Directorate Of Commercial Taxes & Ors.

HC set aside GST refund rejection order for export transactions due to violation of natural justice principles. Petitioner exported goods under zero-rated ... Challenge to refund rejection order issued in Form GST RFD-06 - mismatch between the data furnished by the exporter of goods in shipping bill and those furnished in the statement of outward supply in Form GSTR – 1 - lack of opportunity to respond to the SCN - violation of principles of natural justice - HELD THAT:- It is an admitted position that the petitioners are engaged in the business of manufacture and exports, and in usual course had exported certain goods. The petitioners claim to have exported the goods with payment of integrated goods and service tax under two several invoices dated 17th April, 2023 and 3rd June, 2023 along with two corresponding shipping bills dated 18th April, 2023 and 5th June, 2023. According to the petitioners, it had exported the goods in compliance with the provisions for making zero rated supply as prescribed in Section 16 of the IGST Act, 2017. Since the petitioners claim to have exported the goods along with duty, the petitioners were expecting that upon furnishing of the return filed by the petitioners in Form GSTR-3B, the petitioners’ bank account would be credited with the integrated goods and service tax already paid in respect of the shipping bill to the petitioners’ bank account. In the instant case, records would reveal that the petitioners refund was not effected and the same was withheld in terms of Rule 96 (4) of the said Rules. The benefit of doubt should be given to the petitioners, especially when the petitioners may not have got appropriate opportunity to respond to the show cause - Accordingly, on the ground of violation of principle of natural justice the refund rejection order dated 25th September, 2024 is set aside. Conclusion - The petitioners should be given the benefit of doubt, especially considering the lack of opportunity to respond to the show cause. Petition disposed off. The instant case involves a writ petition challenging a refund rejection order issued in Form GST RFD-06 dated 25th September, 2024. The petitioner, engaged in the manufacture and supply of ferro alloys, exported goods and claimed a refund of integrated tax paid on those goods under Rule 96 of CGST/WBGST/IGST Rules, 2017. The petitioners argued that discrepancies between the data in the shipping bill and the statement of outward supply could be rectified by the exporter, as per the proviso to Rule 96(1)(b). They also highlighted the process for refund under Rule 96(3) and the circumstances for withholding a refund under sub-rule (4).The petitioners contended that due to issues with the common portal, they could not identify the system-generated refund application in Form GST RFD-01, leading to the refund rejection order. The State respondents argued that communication through the common portal was the only mode specified, and the petitioners were at fault for not responding to the system-generated application and subsequent show cause.The Court considered the petitioners' engagement in the export business, compliance with tax regulations, and the expectation of refund upon filing Form GSTR-3B. It noted that the refund was withheld under Rule 96(4)(c) and that the petitioners had missed the communication due to the portal's structure. The Court held that the petitioners should be given the benefit of doubt, especially considering the lack of opportunity to respond to the show cause.Consequently, the Court set aside the refund rejection order on the grounds of violating the principle of natural justice. It allowed the petitioners to respond to the show cause within two weeks and directed the proper officer to decide on the refund application within four weeks of the petitioners' response. The writ petition was disposed of with these directions.In summary, the Court's decision favored the petitioners, emphasizing the importance of natural justice and providing them with an opportunity to respond to the show cause. The judgment highlighted the complexities of the refund process under the GST rules and the challenges faced by taxpayers in navigating the common portal for communication.