IGST refund demand adjudication set aside for lack of fair hearing and failure to examine Rule 96B applicability.

Allahabad HC considered an IGST refund-related demand and held that the State tax authority's jurisdiction objection could not be accepted because officers appointed under the State GST framework may act as proper officers for IGST matters in the circumstances contemplated by the statute and notifications. It also found the adjudication procedurally unsustainable because the notice fixed the reply and hearing on the same date, no fresh notice was issued before the later order, and the petitioner's response was not properly considered. The Court further held that the applicability of Rule 96B to the prior assessment period and the effect of the circular raised legal issues that had not been examined and required fresh determination. The order was set aside and the matter remitted for de novo adjudication.

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Issues: (i) whether the State tax authority had jurisdiction to proceed in respect of IGST refund-related demand; (ii) whether the impugned demand order was vitiated for want of a fair opportunity of hearing; (iii) whether the applicability of Rule 96B to the assessment year 2019-20 and the effect of the circular were required to be examined by the adjudicating authority.

Issue (i): whether the State tax authority had jurisdiction to proceed in respect of IGST refund-related demand.

Analysis: Section 4 of the Integrated Goods and Services Tax Act, 2017 authorises officers appointed under the State Goods and Services Tax Act to act as proper officers for IGST purposes in the circumstances contemplated by the statute and the relevant notifications. In the absence of any showing that an exception or condition excluded the present matter, the jurisdictional objection could not be accepted.

Conclusion: The jurisdictional challenge was rejected.

Issue (ii): whether the impugned demand order was vitiated for want of a fair opportunity of hearing.

Analysis: The notice fixed the same date for filing the reply and for personal hearing, and the order was not passed on that date but substantially later without any fresh notice or reminder before deciding the matter. The adjudication was nonetheless made by reiterating the notice allegations, which showed that the petitioner's response and hearing were not effectively considered.

Conclusion: The order was found to be procedurally unsustainable for want of proper consideration of the petitioner's case.

Issue (iii): whether the applicability of Rule 96B to the assessment year 2019-20 and the effect of the circular were required to be examined by the adjudicating authority.

Analysis: The dispute raised a legal question regarding whether Rule 96B of the Central Goods and Services Tax Rules, 2017, inserted by Notification No. 16/2020-Central Tax dated 23.03.2020, could operate for a prior period and whether the circular relied upon by the petitioner had bearing on the demand. Those legal aspects had not been examined on merits by the authority below and required fresh determination in accordance with law.

Conclusion: The matter had to be reconsidered by the adjudicating authority on these legal issues.

Final Conclusion: The impugned order was set aside and the matter was remitted for fresh adjudication after affording an opportunity of reply and personal hearing.

Ratio Decidendi: Where an adjudicating authority decides a tax demand without proper opportunity and without examining a material legal objection, the order cannot stand and the matter must be remitted for fresh decision.

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