For the sole reason that the order rejecting the claim is based upon a silent show cause notice, I have no hesitation in holding that the principles of natural justice have been violated while adjudication of refund claim of the petitioner.
Section 54 of the CGST Act, 2017 – Refund ---The petitioner challenged the order dated 14.09.2020, whereby the appeal filed against the order dated 07.04.2020 has been rejected. The petitioner filed an application for refund in Form RFD-01 claiming a refund of Rs. 13,68,758/- under inverted duty structure on the portal for the period April 2018 to July 2018. The respondent no. 2 on 19.03.2020 issued a SCN in Form GST-RFD-08 for rejection of the refund application on the reason as "Other". The petitioner could not file reply to the said SCN because of lock-down declared on 22nd March, 2020. The respondent no. 2 without giving any opportunity of hearing rejected the refund application on 07.04.2020. The reason for rejection was neither uploaded nor given to the petitioner. On 19.06.2020 the respondent no. 2 handed over a copy of the order passed in the case of the petitioner rejecting the refund claim. The petitioner challenged the said order dated 07.04.2020, which was dismissed on 14.09.2020, on the ground that he had not given any reply. The respondent submitted that once the petitioner had not filed the refund documents, the department was bound to reject the refund claim. The court observed that in quasi judicial proceedings that too relating to financial adjudication, the proposed reasons for rejection should be specifically contained and informed to the assessee so as to enable him to give his reply in a conclusive and reasonable manner. The principles of natural justice have been violated while adjudication of refund claim of the petitioner.
Held that:- The Hon’ble High Court allowed the petition and set aside the order dated 07.04.2020 and appellate order dated 14.09.2020. Further, directed the respondent no. 2 to pass a fresh order on the application of the petitioner, three months.