Refund application cannot be rejected without providing opportunity of personal hearing to the assessee

[CA Bimal Jain]

The Hon’ble Madras High Court in M/s. Lenovo India Private Limited Vs Assistant Commissioner of GST & Central Excise in [2023 (2) TMI 360 - MADRAS HIGH COURT] quashed the Order passed by the Revenue Department rejecting the refund application of the assessee, on the grounds that, no opportunity of personal hearing was provided, which is against the principles of natural justice. Further, directed the Revenue Department to pass an order after adhering to the principles of natural justice, considering on merits and in accordance with law within a period of 12 weeks.

Facts:

M/s. Lenovo India Private Limited, (“the Petitioner”) has challenged the order dated December 13, 2022 (“the Impugned Order”) rejecting their application seeking refund claim for INR 8,52,78,067/- which being Integrated Goods and Services Tax (“IGST”) paid on supply of goods to SEZ Units on the ground of violation of principles of natural justice.

A Show Cause Notice dated November 12, 2022 (“the Impugned SCN”) was issued to the Petitioner by the Revenue Department (“the Respondent”) proposing to reject the refund application of the Petitioner and calling upon the Petitioner to submit a reply within a period of 15 days. Further, the Petitioner was called upon to appear on November 28, 2022 through physical/virtual hearing. The Petitioner submitted a reply dated December 02, 2022 requesting for a personal hearing, which was not afforded to the Petitioner and consequently, the Impugned Order was passed.

Being aggrieved, the writ petition has been filed.

Issue:

Whether the principles of natural justice have been violated while rejecting the refund claim?

Held:

The Hon’ble Madras High Court in 2023 (2) TMI 360 - MADRAS HIGH COURT held as under:

• Stated that, that the Respondent should not have scheduled a physical/virtual hearing within seven days from the date of issue of the Impugned SCN as the Petitioner was given 15 days to submit a reply to the Impugned SCN.
• Observed that, no personal hearing was afforded to the Petitioner and the objections raised by it were also not considered.
• Further observed that, principles of natural justice have been violated by the Respondent before passing of the Impugned Order by not providing the opportunity of hearing to the Petitioner.
• Quashed the Impugned Order.
• Remanded the matter back to the Respondent for fresh consideration on merits and in accordance with law.
• Directed the Respondent to pass an order within a period of 12 weeks.

(Author can be reached at info@a2ztaxcorp.com)