2025 (12) TMI 989 - HC - GST

Refund rejection communication held appealable order u/s107(11); appellate dismissal set aside, matter remanded for reconsideration

HC held that the communication rejecting the petitioner's refund claim under the KGST/CGST Act constituted a proper 'order' appealable under s.107(11). ... Rejection of refund application of the petitioner - First Appellate Authority has misled/misconstrued the refund rejection order and has summarily dismissed the appeal as not maintainable - communication rejecting the refund claim constitutes proper order u/s 107(11) of KGST & CGST Act, 2017, appealable or not - relevant provisions of KGST Act and judgements not taken into account before rejection of refund - HELD THAT:- As can be seen from the order of the Appellate Authority, there is no finding recorded on merits by the Appellate Authority, which has proceeded to summarily reject the appeal on the erroneous premise that no refund rejection order was passed, which is factually incorrect and contrary to the material on record. It is also noticed that the First Appellate Authority has summarily rejected the appeal, without recording any finding on merits and without appreciating that respondent No.2 passed the order as refund rejection order, I deem it just and appropriate to allow the petition by setting aside Annexure-A and remit the matter back to respondent No. 1 for reconsideration afresh, in accordance with law. The impugned order at Annexure-A dated 21.10.2023 passed by respondent No. 1 is hereby set aside - matter is remitted back to respondent No. 1 - the First Appellate Authority for reconsideration of the matter afresh, in accordance with law - petition allowed by way of remand. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the communication rejecting the refund claim, comprising the order in FORM GST RFD-06, the online portal screenshot, and the endorsement, constituted a 'decision or order' under Section 107 of the KGST/CGST Acts, amenable to appeal. 1.2 Whether the First Appellate Authority was justified in dismissing the appeal as not maintainable on the ground that it had been filed only against an 'endorsement' and not against an appealable order. 1.3 Consequential relief and directions upon holding that the appeal was maintainable. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Character of the refund rejection and appealability under Section 107 Legal framework 2.1 The Court referred to Section 107(1) of the KGST/CGST Acts, which permits an appeal to the Appellate Authority by any person aggrieved by any 'decision or order' passed under the Act by an adjudicating authority. Interpretation and reasoning 2.2 The Court examined in detail: (i) the refund rejection order in FORM GST RFD-06 dated 28.01.2022, (ii) the screenshot from the GST portal showing the refund rejection, and (iii) the endorsement dated 14.02.2022 explaining the basis for rejection. 2.3 From these documents, the Court found that a detailed and reasoned refund rejection order had in fact been passed by the jurisdictional authority, explicitly rejecting the refund claim for the relevant period, recording factual findings and legal grounds, and maintaining the earlier RFD-06 rejection. 2.4 The Court noted that the endorsement itself recounted the issuance of the show cause notice, the refund rejection order in RFD-06, consideration of the taxpayer's reply and personal hearing, and finally confirmed that the refund rejection order 'stands intact', thereby evidencing a concluded adjudicatory decision on the refund application. Conclusions 2.5 The Court held that the refund rejection, as embodied in the RFD-06 order read with the endorsement and portal record, clearly constituted a 'decision or order' of the adjudicating authority under the Act, and was therefore appealable under Section 107. Issue 2: Validity of the dismissal of the appeal as not maintainable Interpretation and reasoning 2.6 The First Appellate Authority had dismissed the appeal on the premise that it was filed only against an 'endorsement', which was treated as neither a 'decision' nor an 'order' for the purposes of Section 107. 2.7 The Court held that this premise was factually incorrect and contrary to the material on record, because: (a) a refund rejection order in RFD-06 had been passed, and (b) the endorsement and portal screenshot formed part of the same composite refund rejection process. 2.8 The Court observed that the First Appellate Authority failed to appreciate the true nature of the refund rejection order and failed to record any finding on the merits of the refund claim, thereby improperly summarily dismissing the appeal. Conclusions 2.9 The Court concluded that the dismissal of the appeal as not maintainable was erroneous in law and on facts. 2.10 The appeal filed by the petitioner was held to be maintainable and appealable before the First Appellate Authority under Section 107. Issue 3: Consequential directions and remand Interpretation and reasoning 2.11 Having found that an appealable order existed and that the appeal was wrongly rejected as not maintainable, the Court considered it appropriate not to adjudicate the refund claim on merits, but to restore the matter to the statutory appellate forum. Conclusions 2.12 The impugned appellate order dismissing the appeal was set aside. 2.13 The matter was remitted to the First Appellate Authority for fresh consideration of the appeal on merits, in accordance with law. 2.14 The Court directed that: (i) the petitioner's appeal shall be treated as maintainable, (ii) the petitioner shall appear before the First Appellate Authority on the specified date without awaiting further notice, and (iii) the First Appellate Authority shall dispose of the appeal on merits within four months from that date.