Fair Hearing Mandatory Before GST Refund Denial, Rules Punjab and Haryana HC

The Punjab and Haryana High Court quashed an order that had cancelled the GST refund for taxpayers, citing a breach of the principles of natural justice and Rule 92(3) of the Central Goods and Services Tax (CGST) Rules, 2017. The court held that the tax authorities are obliged to grant a fair opportunity of hearing before cancelling any GST refund.

In the present case, M/s Creatif Design (petitioner) had contested ten orders cumulatively that had denied its GST refund. The petitioner argued that the tax authorities had issued the impugned orders without granting a fair opportunity of hearing, which is a clear violation of the principles of natural justice. Furthermore, the two rejection orders dated June 07, 2024, and September 05, 2024, were issued without issuing any prior show cause notice (SCN).

When the high court analysed the facts of the case, it noted that, as per the provisions of Rule 92(3) of the Central Goods and Services Tax (CGST) Rules, 2017, the tax authorities are mandated to grant a concerned taxpayer a fair opportunity of hearing before rejecting any application for a GST refund. However, in the present case, the tax authorities had violated the same provision. Hence, it is not just a contravention of the principles of natural justice but also of the provision of Rule 92(3) of the 2017 Rules.

In conclusion, the high court quashed the impugned order cancelling the petitioner’s GST refund. However, the tax authorities are permitted to proceed further in the case.