Order set aside for ignoring petitioner's reply under Section 54(1) CGST Act, case remanded for fresh hearing
The HC set aside the adjudicating authority's order dated 27.07.2023 and the appellate authority's order dated 21.05.2024, finding a violation of natural justice due to failure to consider the petitioner's reply and relevant circulars. The dismissal of the refund claim was based solely on non-compliance with the SCN without a reasoned, speaking order, contrary to the Foreign Trade Policy, EPCG Scheme, and Section 54(1) of the CGST Act. The matter was remanded for fresh adjudication, directing the authority to examine all contentions and supporting documents thoroughly.
ISSUES:
Whether the adjudicating authority exercising quasi-judicial functions under the CGST Act is required to pass a reasoned and speaking order considering all relevant submissions and circulars relied upon by the petitioner.Whether the appellate authority's dismissal of the appeal without adequate consideration of the petitioner's reply and relevant statutory provisions, including the Foreign Trade Policy and EPCG Scheme, is lawful.Whether the failure to consider the petitioner's reply and supporting documents violates the principles of natural justice.Whether the petitioner is entitled to refund of tax paid on procurement of capital goods under the Export Promotion Capital Goods (EPCG) Scheme read with relevant statutory provisions.
RULINGS / HOLDINGS:
The adjudicating authority's order dated 27.07.2023 is held to be not a "reasoned and speaking order" as it failed to consider the petitioner's reply dated 28.06.2023 and the circulars cited therein, rendering the order liable to be set aside.The appellate authority's order dated 21.05.2024 dismissing the appeal without proper consideration of the petitioner's submissions and relevant statutory provisions is also set aside as it is "wholly illegal and without jurisdiction."The failure to consider the petitioner's reply and supporting documents constitutes a violation of the principles of natural justice, as quasi-judicial authorities are bound to pass reasoned and speaking orders amenable to judicial review.The matter is remanded to the adjudicating authority to decide afresh after due consideration of all contentions, circulars, and statutory provisions, and to pass a reasoned and speaking order within four months.
RATIONALE:
The Court applied the legal framework established by the Hon'ble Supreme Court in Oryx Fisheries Private Ltd. vs. Union of India & Ors., emphasizing the necessity for quasi-judicial authorities to record cogent, clear, and succinct reasons in support of their conclusions to ensure transparency, fairness, and judicial accountability.The Court reiterated the principles that "justice must not only be done it must also appear to be done," and that recording reasons is essential to prevent arbitrary exercise of power and to facilitate judicial review.The adjudicating authority's failure to analyze whether the circulars and statutory provisions cited by the petitioner applied to the case was a breach of the requirement to provide a reasoned order, violating the broader doctrine of fairness in decision-making.The decision aligns with established principles that quasi-judicial decisions must be reasoned to maintain litigants' faith in the justice delivery system and uphold the rule of law.
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