TMI Blog2021 (3) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... any part of the amount claimed as refund is not admissible or is not payable, he shall issue notice to the applicant requiring filing of reply within 15 days of receipt of notice and after considering the reply make an order sanctioning the amount of refund in whole or in part or rejecting the refund claim which order shall be made available to the applicant. As per the proviso, an application for refund shall not be rejected without giving the applicant an opportunity of being heard. Therefore, there is a clear legal mandate that if an application for refund is to be rejected, the same can only be done after giving the applicant an opportunity of being heard. When the law requires that no application for refund shall be rejected without giving an applicant an opportunity of being heard, the same cannot be substituted by telephonic conversations and exchange of e-mails. This is more so in the case of a claim for refund where no timelimit is fixed vis-a-vis rejection of claim. Under sub-section (7) of section 54, a time-limit of 60 days is prescribed for making of an order allowing claim of refund; but that period of 60 days would commence from the date of receipt of the applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2017 (briefly the CGST Act hereinafter). 5. In compliance thereto petitioner migrated from service tax registration to GST registration and was allotted GST identification number in the State of Maharashtra. 6. It is stated that petitioner had entered into a master agreement dated 03.05.2004 with Bank of America National Association (for short BANA hereinafter), a national banking association incorporated under the laws of United States of America. The agreement was entered into to provide for information technology and information technology enabled services by the petitioner to BANA. Details of the support services provided by the petitioner to BANA have been mentioned in the writ petition. 7. In order to provide the mentioned output services, petitioner received various input services and availed the credit of tax paid thereon. According to the petitioner, the services provided by it to BANA qualifies as export of service as well as zero-rated supply in terms of sections 2(6) and 16 of the Integrated Goods and Services Tax Act, 2017 ( IGST Act for short). 8. Petitioner exported the said services without payment of tax and filed related applications in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner personally met respondent No.4 and requested for personal hearing post filing of reply. Due to technical glitches on the GSTN portal, petitioner was initially not able to file its replies on the portal. The replies were filed through various emails denying the allegations and contentions advanced in the show cause notices. However, petitioner subsequently filed its respective replies to the show cause notices on the GSTN portal in the prescribed format on 18.03.2020 and 19.03.2020. 10. On 16.03.2020, representative of the petitioner called upon respondent No.4 who instructed the representative to submit certain documents and informed him that after submission of the documents, personal hearing would be granted to the petitioner. 11. Because of outbreak of coronavirus pandemic, it is stated that offices of the petitioner and its consultants were closed. As a result, petitioner could not collect the required documents and, therefore, it sent emails dated 17.03.2020 and 02.04.2020 seeking additional time till 07.04.2020 and 27.04.2020 respectively for submission of documents. 12. Vide email dated 21.04.2020, respondent No.4 instructed the petitioner to submit the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible and entitled to refund. 16. Assailing the legality and validity of the aforesaid orders, present writ petition has been filed seeking the relief as indicated above. 17. On 22.09.2020, this Court had passed the following order:- 3. Mr. Shah submits that this is a case where petitioner s claim to refund has been rejected without giving any opportunity of hearing to the petitioner. In this connection he has referred to Rule 92(3) more particularly to the proviso thereto of the Central Goods and Services Tax Act, 2017 which clearly provides that no application for refund shall be rejected without giving the applicant an opportunity of being heard. He has also taken us to the impugned order of the Assessing Officer at Page-292 of the paper-book and submits that Assessing Officer had wrongly relied upon Circular dated 17 th March 2020 issued by the Commissioner of State Tax under Maharashtra Value Added Tax Act, 2002 which deals with time barring assessments; on the face of it, the said Circular is not applicable to a claim for refund. He has also referred to the judgment of this Court in Yeshwant Gajanan Joshi others Vs. Hindustan Petroleum Corporation Limited, AIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant documents on record, it is observed that nature of services provided by the petitioner to BANA falls within the definition of intermediary services under section 2(13) of the IGST Act, 2017. Therefore, petitioner is not qualified for export of services, place of supply being in India. Thus, the petitioner is required to pay IGST on such transactions. In the instant case, respondent Nos.2 to 4 have not raised the demand but have only rejected the claim for refund in respect of unutilized input tax credit by holding that IGST is payable on such transactions. However, no demand has been raised as of date upon the petitioner. In this connection, reference has been made to the master agreement dated 03.05.2004. 19.3. Following the show cause notices date of hearing was given to the petitioner. Petitioner was required to submit reply online. Thus, opportunity of being heard was granted to the petitioner. Request for further time sought for by the petitioner was dilatory and, therefore, was not justified. 19.4. Petitioner had attended office of the respondents on 04.03.2020 and 16.03.2020 and thereafter filed detailed reply vide email dated 23.04.2020. 19.5. In the aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince infringement of the rules of natural justice strikes at the root, it is a good ground for invoking the power of judicial review. That apart, the reply affidavit has been filed by an officer of the rank of Joint Commissioner which is also the rank and designation of the appellate authority. Claim of the petitioner to refund has been contested and denied on merit by the affiant. Therefore, filing of appeal would be a futile exercise. 20.2. That apart, petitioners have reiterated the contentions advanced in the writ petition while denying the stand taken by the respondents in the reply affidavit. 21. Mr. Prakash Shah, learned counsel for the petitioner has at the outset referred to rule 92 of the CGST Rules. He submits that under rule 92(3) of the CGST Rules where the proper officer is satisfied for reasons to be recorded in writing that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice to the applicant in the prescribed form requiring the applicant to furnish a reply also in the prescribed form within 15 days and after considering the reply, make an order either sanctioning the amount of refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to be heard afresh. 22. Ms. Jyoti Chavan, learned AGP appearing for the respondents has referred to various provisions of the CGST Act and the MGST Act. Referring to section 107 of the MGST Act, she submits that the impugned orders rejecting the claim of the petitioner to refund are appealable orders under sub-section (1) of section 107. Therefore, petitioner has got statutory alternative remedy which is also efficacious. When the petitioner has got adequate and efficacious statutory alternative remedy, this Court may not invoke its extra-ordinary jurisdiction under Article 226 of the Constitution of India to entertain the writ petition. 22.1. That apart, learned AGP submits that the dispute involved is claim to refund which according to the respondents petitioner is not entitled to. Therefore, the dispute centers around factual aspects for which appeal would be the appropriate remedy and not a writ petition. 22.2. Adverting to the impugned orders, she submits that respondent No.4 had considered all relevant aspects and thereafter had passed reasoned orders rejecting the refund applications of the petitioner. Before passing such orders, respondent No.4 had given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outset we may mention that this Court under Article 226 of the Constitution of India is confining its scrutiny to the decision making process culminating in passing of the impugned orders dated 26.06.2020. In exercise of the power of judicial review, merit of the decision per se is not being examined. It is the decision making process with which judicial review is concerned. Therefore, we are consciously not entering into the arena of merit of the petitioner's claim to refund at this stage. 26. We have already noticed that petitioner had filed five applications for refund covering five periods from April, 2018 to June, 2019 in the prescribed format on 27.12.2019, 21.01.2020, 27.01.2020, 17.02.2020 and 19.02.2020. Respondent No.4 issued show cause notices thereafter to the petitioner on 26.02.2020 in respect of three claims and on 09.03.2020 in respect of the remaining two claims. Those were in fact notices for rejection of application for refund. We may take one such show cause notice which is dated 09.03.2020 for the period from January, 2019 to March, 2019. While giving reasons as to why petitioner is not eligible to get the refund, petitioner was granted 15 days time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person. 31. It may be mentioned that there were some telephonic conversations between officials working under respondent No.4 and the tax consultants of the petitioner. While respondents would like to contend that such telephonic conversations can be construed to be an extension of hearing, the same has been disputed by the petitioner by contending that those conversations were for very brief periods lasting for about a minute or so in which subordinate officials working under respondent No.4 sought for documents etc. In any event, no record of such telephonic conversations have been maintained. What transpired in such conversations is also not known. Therefore, such telephonic conversations cannot be a substitute for a hearing in person or cannot be construed to be a hearing. 32. Be that as it may, respondent No.4 has passed five different but identical orders on 26.06.2020 rejecting the claim of refund made by the petitioner on merit. 33. Section 54 of the CGST Act deals with refund of tax. Sub-section (1) says that any person claiming refund of any tax and interest may make an application before the expiry of two years from the relevant date in the prescribed form and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter giving the applicant an opportunity of being heard. 35. The expression 'opportunity of being heard' is not an expression of empty formality. It is a part of the well-recognized principle of audi alteram partem which forms the fulcrum of natural justice and is central to fair procedure. The principle is that no one should be condemned unheard. It is not necessary to delve deep into the expression save and except to say that by way of judicial pronouncements the said expression has been made central to the decision making process, breach of which would be construed to be violation of the principles of natural justice thus adversely affecting the decision making process; a ground for invoking the power of judicial review. 36. When the law requires that no application for refund shall be rejected without giving an applicant an opportunity of being heard, the same cannot be substituted by telephonic conversations and exchange of e-mails. This is more so in the case of a claim for refund where no timelimit is fixed vis-a-vis rejection of claim. Under sub-section (7) of section 54, a time-limit of 60 days is prescribed for making of an order allowing claim of refund; but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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