Rejection order of refund on account of Zero-rated supplies must be an Speaking Order

Facts: The petitioner herein had exported Knitwear and Knitted Fabric, which amounts to zero-rated supply and in terms of Section 16(3) of the IGST Act, 2017, had applied for refund of ITC under Section 54 of the CGST Act, 2017. The petitioner's claim came to be rejected through five impugned orders, which are challenged in these Writ Petitions. Since the issue involved in all the Writ Petitions are identical in nature, all these Writ Petitions are disposed of, through a common order.
The petitioner had predominantly stressed upon the ground that the rejection orders do not give reasons for inadmissibility of refund and therefore they are non-speaking orders. It was contended that the respondent had, in a cryptic manner, rejected some of the proposals by stating that, as per Section 54(8)(a), the ineligible goods or services are not directly used for making zero-rated supply. Apart from this, there is absolutely no other reasons adduced in the order.

Held: The High Court in this case observed that it is a settled proposition of law that whenever an refund claim application is made, the statutory authority are bound to consider the claim made and pass a reasoned order.

In the present case, the petitioner had made an application for refund under Section 54 of the CGST Act, 2017 and when the respondent had issued notice to them for rejection of the ineligible goods and services of SGST, CGST and IGST, they have given a detailed reply, objecting to the notices. All these objections were required to be dealt with by the authority, before taking a final call, which is conspicuously absent. As such, the order itself can be termed to be “a non-speaking order” and therefore, are liable to be set aside. However, if the respondent is granted an opportunity to pass fresh orders, after considering the objections of the petitioner, the ends of justice could be secured.

The High Court set aside order passed by the respondent and remanded the matter back to the respondent for fresh consideration. The petitioner is at liberty to give fresh objections, atleast within a period of 15 days from the date of receipt of a copy of this order. On receipt of such objections, the respondent herein shall consider all the objections raised by the petitioner and extend due opportunity of personal hearing and thereafter pass appropriate orders, in accordance with law, as expeditiously as possible, in any event, within a period of 60 days from the date of receipt of the petitioner’s objections. 

To read the complete judgement 2020 Taxo.online 662