HC Quashes Order Rejecting Refund Claim Without Issuing SCN and Providing Opportunity of Hearing to Assessee
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- Last Updated on 27 June, 2024
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Case Details: Omkareshwar Embroideries Ltd. v. Union of India - [2024] 162 taxmann.com 453 (Gujarat)
Judiciary and Counsel Details
- Bhargav D. Karia & Niral R. Mehta, JJ.
- Sanket Gupta & Anand Nainawati for the Petitioner.
- Utkarsh R Sharma for the Respondent.
Facts of the Case
The petitioner was engaged in the manufacturing of grey fabrics. The rate of tax on the inputs was higher than the rate of tax on output supply of goods and there was accumulation of credit in the electronic credit ledger of the petitioner. It filed refund claim on account of inverted tax structure under proviso of Section 54(3) read with Rule 89(5) of the Central Goods and Service Tax Rules, 2017.
The department rejected the refund claim on the ground that petitioner did not pay interest with regard to the reversal of ITC and passed the order denying the refund. It filed writ petition against the rejection order and submitted that the impugned order was passed without issuing show-cause notice and without providing any opportunity of hearing.
High Court Held
The Honorable High Court noted that the authority had rejected the refund claim on the ground that petitioner did not pay interest with regard to the reversal of ITC. However, the department failed to issue show cause notice to the petitioner before rejecting the refund claim and there was violation of principles of natural justice. Therefore, it was held that the impugned order was liable to be set aside and the matter was remanded back to the authority for de novo consideration of refund claim.
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