Validity of refund sanction order: court finds lack of reasoned decision and directs reconsideration affecting refund entitlement

Validity of refund sanction orders, where amounts recovered during investigation were claimed as refund, was challenged on grounds of failure to afford personal hearing and absence of a reasoned, speaking order. The administrative order rejected or short-sanctioned the refund without addressing the petitioners submissions and without material disproving deposit during investigation; the impugned reasoning rested solely on inability to distinguish challans. The court found this approach legally deficient as it frustrated principles of natural justice and judicial review of administrative action, and indicated corrective relief by directing reconsideration in accordance with law.

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Issues: Whether the refund sanction order dated 30th June 2022 which short-sanctioned refund of Rs. 1,85,63,835/- (along with interest) should be quashed to the extent of non-granting of that amount because the order was non-speaking, failed to consider the petitioners challans and related material and did not afford a personal hearing in accordance with principles of natural justice, and whether the petitioner should be permitted to seek a fresh refund representation with a direction for a reasoned decision and personal hearing.

Analysis: The impugned order rejected or short-sanctioned the claimed refund on the basis that department records did not permit differentiation between self-assessed payments and payments made during investigation. The order does not contain discussion or reasoning showing that the petitioners documentary material (challans) was considered or that contrary material existed to displace the petitioners claim of payment of Rs. 13,13,75,917/-. The impugned order therefore lacks a reasoned, speaking determination on the factual point central to the refund claim and did not provide the petitioner a personal hearing before denial of part of the refund. Given the absence of departmental findings rebutting the petitioners evidence and the absence of a reasoned decision, procedural fairness and the requirement for a speaking order and opportunity of personal hearing are implicated. Remedial measures confined to quashing the non-reasoned portion of the order and directing fresh consideration after hearing are appropriate to secure compliance with the earlier court direction for refund with interest.

Conclusion: The impugned order dated 30th June 2022 is quashed and set aside to the extent of non-granting of refund of Rs. 1,85,63,835/- along with applicable interest @12% per annum; the petitioner is permitted to file a fresh representation with supporting challans within two weeks and, on receipt, respondent shall provide a personal hearing and pass a reasoned order on the refund claim within six weeks.

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