Facts of the Case:

The petitioner filed a refund application under Section 54 of the CGST Act, 2017 for the period May 2023 to June 2023. Pursuant to this, the refund authority issued a show-cause notice dated 30th April 2024, directing the petitioner to submit a reply within seven days and fixing the hearing on 7th May 2024.

The petitioner, seeking adequate time, filed an adjournment application on 5th May 2024 requesting extension to file a reply till 22nd May 2024. However, the refund authority rejected the adjournment request (allegedly on 6th May 2024), though such rejection was not communicated to the petitioner.

Subsequently, without granting further opportunity or hearing, the authority passed an order dated 17th May 2024 rejecting the refund claim. The petitioner challenged the rejection order before the High Court on the ground of violation of principles of natural justice and non-compliance with Rule 92(3) of the CGST Rules, 2017.

The Revenue contended that adjournment is not a matter of right and the petitioner failed to appear on the scheduled date despite being aware of the hearing. 

Issue:

Whether the refund rejection order passed without granting the statutory period of 15 days for reply under Rule 92(3) is valid. Whether rejection of adjournment and passing of order without proper hearing amounts to violation of principles of natural justice. Whether the refund authority is justified in passing an order without communicating rejection of adjournment request

Held That:

The Court observed that Rule 92(3) of the CGST Rules mandates that the applicant must be given 15 days to file a reply to the show-cause notice. In the present case, only 7 days were granted, which is contrary to the statutory requirement.

Further, although the petitioner sought an adjournment, the same was rejected without proper communication. The authority proceeded to pass the rejection order without ensuring that the petitioner was given a fair opportunity to present his case.

The Court emphasized that while adjournment cannot be claimed as a matter of right, denial of a reasonable opportunity—especially when the statute prescribes a minimum response time and mandates a hearing—renders the proceedings arbitrary and unsustainable.

Accordingly, the Court set aside the refund rejection order dated 17th May 2024 and remanded the matter back to the refund authority with directions to grant the petitioner 15 days to file a reply and thereafter provide a proper opportunity of hearing before passing a fresh order.

The High Court held that the refund rejection order is illegal and liable to be set aside as it violates both statutory provisions and principles of natural justice.

Case Name: CBF Component Private Limited & Anr. Versus The Union of India & Ors. dated 02.04.2026

To read the complete judgement 2026 Taxo.online 771