Orders passed without considering the assessees request seeking extension of time for filing SCN reply not valid.

Facts: –

• The Petitioner is the exporter of services and avails input tax credit on the input services used in provision of output export services against LUT without payment of tax, in accordance with the applicable provisions and procedures prescribed under GST Law.
• The Petitioner filed a refund claim for the period April, 2018 to March, 2019 on 16.01.2020 and the same was acknowledged through an RFD-02 issued on 22.02.2020.
• That on 23.04.2020, a show cause notice was issued to the petitioner by the respondent authorities proposing to reject the refund claim, however, the petitioner vide its communication dated 28.04.2020 sought extension of time for filing reply to the show cause notice till 30.06.2020 in view of COVID – 19 situation and referring to the Notification No. 35/2020 – Central Tax dated 03.042020, whereby the extension was granted even for filing reply to show cause notices up to 30.06.2020.
• Thereafter, vide order 15.05.2020, the refund claim of the petitioner was rejected without even dealing with the request of the petitioner seeking extension of time for filing reply to the show cause notice. Later, the appeal preferred by the petitioner against the said adjudication order was also dismissed vide impugned order appellate authority dated 14.12.2021.  Being aggrieved the petitioner moved the present writ petition.

Held: –

• The Hon’ble Court after considering the submissions made and facts of the case, found that the perusal of the appellate authority order shows that Notification dated 03.04.2020, by which the time limit for undertaking all compliances falling between 20.03.2020 to 29.06.2020 to be extended up to 30.06.2020, stands mentioned in the grounds of the appeal and the same had been taken note but not dealt with at all. Further it is not the view of the Appellate authority that the said Notification is not applicable to the facts of the case, rather it has chosen to completely ignore the notification.
• It was noted by the Hon’ble Court that the respondents in their reply have taken a very unique stand that the extension Notification had extended the period of limitation to obviate difficulties on account of Covid-19 for ensuring that taxable person/tax professionals, lawyers/litigants do not have to come physically to file proceedings before the authorities, so the notification would be applicable only in those cases where the taxable person has to make compliances physically.
• The Hon’ble Court considering the second contention raised on the behalf of the respondents that ‘in terms of Section 54(7) of the CGST Act, 2017, if any tax is not refunded within 60 days from the date of receipt of application, interest rate @6% would become payable’, found that the submissions made on the behalf of the respondents are misconceived and not well founded.
• It was found by the Hon’ble Court that from the plain language of the Notification does not show the distinction sought to be drawn and the extension of the time had been granted by the Notification to cover all the situations relating to the COVID – 19 pandemic, thus, the stand of the respondents that the extension Notification would apply only in such situation where the compliances had to be made physically, is not maintainable and the contention raised on the behalf of the respondents that the refund application has to be disposed of in 60 days failing which the interest would become payable, is also without any merit as such situation is also covered in the said notification and also for such purpose period was extended up to 30.06.2020.
• The Hon’ble Court observed that it is well settled law that ‘the legality of order has to be tested with the reasons assigned in the order itself’. The distinction made by the respondents has been made only at the stage of filing counter to the writ petition and there is no mention of such a distinction in impugned order, rather in the impugned order the Notification dated 03.04.2020 has been noticed but has not been dealt with at all.
• The Hon’ble Court with the above, held that the impugned orders are not sustainable and it is obligatory on the part of authorities to grant extension in time to the petitioner for filing its reply to the show cause notice dated 23.04.2020 up to 30.06.2020, and then to deal with issues on merit.

The Hon’ble Court with the above findings and without examining the issue on merits allowed the writ petition by setting aside the impugned orders dated 14.12.2021 and 15.05.2020 and the matter was remitted back to the Adjudicating authority granting three weeks’ time to the petitioner to file the reply to the show cause notice.  Then the matter with respect to the refund claim would be considered on merits and a reasoned and speaking order would be passed dealing with all contentions raised in the reply filed, after affording a person hearing to the authorized representative of the petitioner.

To read the complete judgment 2022 Taxo.online 851