Case Note & Summary
The petitioner, K Line India Pvt. Ltd., a company providing shipping services, filed refund applications for IGST paid on zero-rated supplies to SEZ units in December 2017. The refund application was filed on 28 August 2018. Without issuing any deficiency memo or show cause notice, the respondent authority passed an ex-parte order on 13 September 2019 rejecting the refund application, which was received by the petitioner on 25 September 2019. The petitioner subsequently filed appeals against the rejection order, but the appellate authority dismissed the appeals on 31 July 2023 as barred by limitation under Section 107(1) of the CGST Act, 2017. The petitioner challenged this dismissal before the High Court. The court considered whether the rejection of refund without following Rule 92 of the CGST Rules, 2017 was valid and whether the appellate authority's dismissal on limitation grounds was proper. The court noted that Rule 92 mandates issuance of a deficiency memo and opportunity of hearing before rejecting a refund application, which was not done. The court also observed that the appellate authority should have considered the appeal on merits rather than dismissing it as time-barred, especially given the procedural irregularities in the original order. The court set aside the appellate order and remanded the matter back to the appellate authority for fresh consideration on merits, directing that the limitation issue be considered in light of the facts and circumstances.
Headnote
A) GST - Refund - Deficiency Memo - Rule 92 of CGST Rules, 2017 - The petitioner's refund application was rejected without issuing any deficiency memo or show cause notice, in violation of Rule 92 which mandates such issuance and opportunity of hearing before rejection. The court held that the order rejecting refund was passed ex-parte without following due process, and thus the appellate authority ought to have considered the appeal on merits rather than dismissing it as time-barred. (Paras 3-5)
B) GST - Limitation - Appeal - Section 107(1) of CGST Act, 2017 - The appellate authority dismissed the appeal as barred by limitation under Section 107(1) without considering the merits of the case. The court held that the appellate authority should have examined whether there was sufficient cause for delay and should not have mechanically rejected the appeal on limitation grounds, especially when the refund rejection order itself was procedurally flawed. (Paras 2, 6-7)
Issue of Consideration
Whether the rejection of refund application without issuing deficiency memo and opportunity of hearing is valid, and whether the appellate authority's dismissal of appeal as barred by limitation under Section 107(1) of CGST Act, 2017 is proper
Final Decision
The court set aside the appellate order dated 31 July 2023 and remanded the matter back to the appellate authority for fresh consideration on merits, directing that the limitation issue be considered in light of the facts and circumstances.
Law Points
- Rule 92 of CGST Rules
- 2017 mandates issuance of deficiency memo and opportunity of hearing before rejecting refund application
- Section 107(1) of CGST Act
- 2017 provides limitation period for appeal
- Appellate authority must consider limitation issue on merits
Case Details
Writ Petition (L) No. 36200 of 2023 with Writ Petition No. 4454 of 2024, Writ Petition No. 4467 of 2024, Writ Petition No. 4804 of 2024, Writ Petition No. 4911 of 2024, Writ Petition No. 5111 of 2024, Writ Petition No. 3440 of 2025
G. S. Kulkarni, Aarti Sathe
Mr. Bharat Raichandani a/w. Mr. Suraj Ghadigaonkar for the petitioner, Mr. Subir Kumar a/w. Ms. Niyanta Trivedi for the respondent, Mr. Himanshu Takke, AGP for the State in WPL/36200/2023, WP/4454/2024 and WP/4911/2024, Mr. Mohit Jadhav, Addl. G.P. for the State in WP/4467/2024 and WP.4804/2024, Mr. Amar Mishra, AGP for the State in WP/5111/2024, Ms. Jaymala Ostwal, Addl. G.P. for the State in WP/3440/2025
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petitions challenging rejection of refund applications and dismissal of appeals as barred by limitation under GST law
Remedy Sought
Petitioner sought setting aside of the appellate order dated 31 July 2023 and direction to consider the appeals on merits
Filing Reason
Refund application for IGST paid on zero-rated supplies was rejected without issuing deficiency memo or show cause notice, and appeals were dismissed as time-barred
Previous Decisions
Refund application rejected by order dated 13 September 2019; appeals dismissed by order dated 31 July 2023 as barred by limitation
Issues
Whether the rejection of refund application without issuing deficiency memo and opportunity of hearing is valid under Rule 92 of CGST Rules, 2017
Whether the appellate authority's dismissal of appeal as barred by limitation under Section 107(1) of CGST Act, 2017 is proper
Submissions/Arguments
Petitioner argued that Rule 92 mandates issuance of deficiency memo and opportunity of hearing before rejecting refund, which was not done
Petitioner contended that the appellate authority should have considered the appeal on merits instead of dismissing it as time-barred
Ratio Decidendi
Rule 92 of CGST Rules, 2017 mandates issuance of deficiency memo and opportunity of hearing before rejecting a refund application; failure to do so renders the rejection order procedurally flawed. The appellate authority must consider the appeal on merits and not mechanically dismiss it as time-barred, especially when the original order suffers from procedural irregularities.
Judgment Excerpts
The issue which falls for consideration of this Court in the present proceedings pertains to the action of the department in rejecting the petitioner’s refund application, by an order in original.
the said provision mandates that, in the event the refund, or any part thereof, is found to be inadmissible, the petitioner must be informed by issuance of a deficiency memo and be afforded an opportunity of a hearing.
respondent no. 4, without issuing any deficiency memo or show cause notice, passed an ex-parte order dated 13 September, 2019 rejecting the refund application.
Procedural History
Refund application filed on 28 August 2018; rejected by ex-parte order dated 13 September 2019; appeals filed against rejection; appeals dismissed as barred by limitation on 31 July 2023; writ petitions filed challenging the appellate order.
Acts & Sections
- Central Goods and Services Tax Act, 2017: Section 107(1)
- Central Goods and Services Tax Rules, 2017: Rule 92
