Facts of the Case:

In this case, the petitioners engaged in manufacture and export of fly ash and fly ash bricks, claimed refund of accumulated/unutilised ITC of ₹49,60,054 on zero-rated exports made without payment of IGST under LUT for the period December 2019 to March 2020. The refund application was rejected by the adjudicating authority on the ground that the manual shipping bill records were not traceable in the ICEGATE system. The petitioners preferred an appeal, which was also rejected.

In the appellate proceedings, however, additional grounds concerning Rules 96A, 96B and 89(4)(c) of the CGST/WBGST Rules were relied upon, although these grounds did not form part of the original SCN. The petitioners contended that they were consequently denied an opportunity to rebut these new allegations. They also submitted that the exports were duly established through shipping bills, EGM and other export documents and that any delay or discrepancy in updating the ICEGATE/EGM records was merely procedural.

The petitioners thereafter approached the High Court against the order passed on their rectification application under Section 161. The Revenue opposed the writ petition, inter alia, on the ground that the GST Appellate Tribunal was functional and an alternative statutory remedy under Section 112 was available.

Issue:

Whether the refund proceedings could be sustained when the appellate authority had introduced additional grounds relating to Rules 96A, 96B and 89(4)(c), which were not contained in the original SCN, without providing the petitioners an opportunity to respond to those allegations?

Held That:

The High Court set aside the adjudication order dated 23.11.2020 and appellate order dated 19.02.2022, holding that the SCN constitutes the foundational basis of the proceedings. An adjudicating or appellate authority cannot travel beyond the allegations contained in the SCN and introduce new grounds at a later stage without giving the affected assessee an opportunity to meet such allegations.

The Court found that the appellate authority had expanded the scope of the proceedings by relying upon Rules 96A, 96B and 89(4)(c), which had not formed part of the SCN. Since the petitioners had no opportunity during the original proceedings to rebut these additional allegations, the orders suffered from arbitrariness, illegality and perversity and were therefore unsustainable.

The Court accordingly remanded the matter to the adjudicating authority. The petitioners were directed to submit a comprehensive reply to the original SCN as well as detailed submissions concerning the additional grounds raised at the appellate stage. The authority was directed to pass a reasoned and speaking order after granting an opportunity of personal hearing, independently examining the relevant consignment/export records and the applicability of the relevant Rules.

Importantly, the Court did not decide the petitioners’ substantive entitlement to the refund of ₹49,60,054. It left the issue open for determination by the adjudicating authority. If, upon fresh adjudication, the petitioners are found eligible for the refund, the same is to be disbursed along with applicable interest.

Case Name: Tirupati Vancom Private Limited & Anr. Versus The Deputy Commissiioner of State Tax & Ors. dated 22.09.2026

Citation No. 2026 Taxo.online 3033