High Court Remands GST Refund Matter for Fresh Decision After Authority Failed to Give Reasons:

M/s Deccan Fine Chemicals (India) Private Limited is engaged in the manufacture of active ingredients and advanced intermediates for agrochemicals and had filed two separate refund applications for September 2018 and October 2018 under Section 54(3) of the CGST Act, 2017. The refund claims related to accumulated unutilized input tax credit arising on account of exports made without payment of Integrated Goods and Services Tax (IGST).

The Deputy Commissioner of State Tax, through refund rejection orders dated 29 December 2018, sanctioned only a portion of the refund claimed and rejected the remaining claim. The petitioner later sought written reasons for the rejection, but no reasons were provided, leading it to approach the Gujarat High Court.The petitioner argued that the refund rejection orders were liable to be quashed as the respondent authority had neither provided an opportunity of hearing nor assigned reasons for rejecting the portion of the refund claim.

The High Court noted that the challenge to the orders was founded on violation of the principles of natural justice. Upon perusal of the orders, the Court further found that the respondent authority had not assigned any reason for rejecting the part of the refund claim. It was also undisputed that the petitioner had not been afforded an opportunity of hearing before the partial rejection.

Allowing the writ petition, the Gujarat High Court quashed and set aside both refund rejection orders dated 29 December 2018.The Court remanded the matter to the respondent authority which had passed the original orders and directed it to issue a show cause notice to the petitioner and comply with the principles of natural justice.