Navneet R. Jhanwar v. State Tax Officer – 2021 (47) G.S.T.L. 337 (High Court – Jammu & Kashmir)

Refund Order shall be quashed, if Opportunity of being heard is not granted.

Facts: The petitioner submitted a refund claim of excess tax paid but respondent instead of directing refund, issued a show cause notice calling upon petitioner to show cause as to why his refund claim to extent of amount claimed should not be rejected or amount erroneously refunded should not be recovered for reason that claim for refund was belated having been filed after expiry of two years from relevant date, as per explanation 2 in Section 54(1) of CGST Act, 2017 and that in the present case, the period had expired in April, 2020. 

Subsequently the reply to SCN was filed by the Petitioner explaining the delay, whereby on account of lockdown due outbreak of corona virus pandemic, time limit/due date for various compliances was extended upto August 31, 2020 ( as per Notification No.35/2020-Central Tax, dated April 3, 2020 and Notification No.55/2020-Central Tax, dated June 27, 2020). The explanation on delay by the Petitioner was accepted and accordingly, the refund application of the Petitioner was processed. However, the Respondent without serving further SCN upon the Petitioner, passed the refund rejection order dated December 2, 2020 (“Refund rejection order”) on the grounds that were not proposed in the SCN and no opportunity of hearing was provided regarding the same.

Issue: Whether the Refund rejection order can be passed without giving an opportunity of being heard.

Held: The Hon’ble High Court of Jammu & Kashmir that impugned order of rejection of refund claim of petitioner was not in conformity with proposal made in show cause notice that was served upon petitioner when adjudicating authority found it barred by limitation and grounds on which impugned order had been passed were never proposed to petitioner nor was he ever given any opportunity to explain his position. And, therefore, impugned order was to be quashed and case was remanded back to respondent for passing order afresh after putting petitioner to proper show cause notice and after affording him a reasonable opportunity of being heard. 

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