2024 Taxo.online 440

In a recent judicial ruling, the contentious issue of GST exemption has taken center stage, shedding light on a complex web of legal intricacies and missed opportunities for a fair hearing. The petitioner, a company engaged in manufacturing steel products, also imported coal and claimed Input Tax Credit (ITC) on the cess paid for the financial year 2017-18. The coal was used in both domestic and zero-rated supplies. The petitioner filed refund applications for export supplies and SEZ units, but faced rejection and subsequent appeals.

The crux of the matter lies in the alleged violation of principles of natural justice. The rejection order of the refund application was passed without providing the petitioner with a proper opportunity of hearing. Despite the petitioner filing a show-cause reply within the stipulated time frame, the rejection order was issued prematurely, without due consideration of the petitioner's submissions. The appellate authority's rejection of the petitioner's appeal further exacerbated the situation, leaving the petitioner with no alternative remedy.

Upon examination of the legal framework, it becomes evident that the rejection of the refund application without affording the petitioner a fair opportunity of hearing violates Rule 92(3) of the Central Goods and Services Tax Rules, 2017. The rule mandates that no application for refund shall be rejected without granting the applicant an opportunity of being heard. In this case, the respondent authority failed to adhere to this fundamental principle of natural justice.

Furthermore, the rejection order itself lacks proper reasoning, rendering it unsustainable under Rule 92(3). The absence of a Document Identification Number (DIN) on both the show-cause notice and the rejection order further invalidates the proceedings, as per Circulars issued by the Ministry of Finance.

In light of these glaring deficiencies, the court has remanded the case back to the respondent authority, emphasizing the need for a proper opportunity of hearing and adherence to the principles of natural justice. The petitioner's submissions must be duly considered, and a fresh order should be passed in accordance with the law.

This ruling serves as a reminder of the importance of procedural fairness and adherence to legal requirements in administrative proceedings. It underscores the need for thorough scrutiny and reasoned decision-making to uphold the integrity of the legal system and ensure justice for all parties involved.

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