CA Sansaar
Bombay HC Quashes ₹23.67 Cr GST Refund Rejection Over Due Process Violations
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The Bombay High Court has quashed an order rejecting a ₹23.67 crore GST refund claim filed by Golden Cryo Pvt. Ltd., citing serious procedural lapses and non-compliance with statutory provisions under Rule 92(3) of the CGST Rules.
In its ruling, the Court underscored that the tax authority acted in undue haste and failed to adhere to the principles of natural justice by neither allowing the mandated response period nor granting the petitioner an opportunity for a personal hearing. The bench directed that the matter be reconsidered afresh in accordance with the law.
The case pertains to a refund application filed by the company for accumulated input tax credit (ITC) relating to exports made without payment of tax for September 2025. While the application was initially acknowledged in October, a show cause notice was issued on December 12, alleging that certain suppliers of the petitioner were engaged in issuing fraudulent invoices.
The petitioner responded via email on December 19 and explicitly sought a personal hearing. However, the Assistant Commissioner proceeded to reject the claim on the following day without taking the reply into account or providing an opportunity to be heard.
Counsel for the petitioner argued that such action was in direct violation of Rule 92(3), which stipulates a minimum period of 15 days for response and mandates a hearing before passing any adverse order. The Revenue, on the other hand, contended that no valid reply had been filed on the GST portal and thus assumed non-compliance.
Rejecting this stance, the division bench of Justices Girish Kulkarni and Aarti Sathe found merit in the petitioner’s submissions and described the officer’s conduct as fundamentally flawed. The Court observed that the statutory requirement of granting 15 days’ time had been arbitrarily curtailed to seven days, rendering the process legally unsustainable.
Criticising the approach adopted by the tax officer, the Court noted that such deviation from prescribed procedures undermines the rule of law, causes undue hardship to taxpayers, and contributes to unnecessary litigation, thereby burdening the judicial system.
In its ruling, the Court underscored that the tax authority acted in undue haste and failed to adhere to the principles of natural justice by neither allowing the mandated response period nor granting the petitioner an opportunity for a personal hearing. The bench directed that the matter be reconsidered afresh in accordance with the law.
The case pertains to a refund application filed by the company for accumulated input tax credit (ITC) relating to exports made without payment of tax for September 2025. While the application was initially acknowledged in October, a show cause notice was issued on December 12, alleging that certain suppliers of the petitioner were engaged in issuing fraudulent invoices.
The petitioner responded via email on December 19 and explicitly sought a personal hearing. However, the Assistant Commissioner proceeded to reject the claim on the following day without taking the reply into account or providing an opportunity to be heard.
Counsel for the petitioner argued that such action was in direct violation of Rule 92(3), which stipulates a minimum period of 15 days for response and mandates a hearing before passing any adverse order. The Revenue, on the other hand, contended that no valid reply had been filed on the GST portal and thus assumed non-compliance.
Rejecting this stance, the division bench of Justices Girish Kulkarni and Aarti Sathe found merit in the petitioner’s submissions and described the officer’s conduct as fundamentally flawed. The Court observed that the statutory requirement of granting 15 days’ time had been arbitrarily curtailed to seven days, rendering the process legally unsustainable.
Criticising the approach adopted by the tax officer, the Court noted that such deviation from prescribed procedures undermines the rule of law, causes undue hardship to taxpayers, and contributes to unnecessary litigation, thereby burdening the judicial system.
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