The court established that tax authorities must provide clear reasons for rejecting refund claims to comply with natural justice principles.

ORDER :

1. Heard.

2. Challenge to order dated 13.09.2023 passed by the Assistant Commissioner, State Tax, Ward-II, Circle-D, Zone-II, Jaipur, Commercial Tax Department is premised mainly on the ground that the notices issued to the petitioner did not comply with the mandate of law. Challenge to the impugned order is also on the ground of violation of statutory scheme incorporating principles of natural justice.

3. Shorn of unnecessary details, the petitioner, which is engaged in the construction and development business, received advance consideration on account of agreed supply of a flat from the buyer and it discharged its GST liability in GSTR-3B filed from time to time while submitting monthly returns as detailed in para 2 of the writ petition. It is also a fact stated in the petition that before completion of the construction, booking of the flats was cancelled due to a casualty.

4. According to the petitioner, it was entitled to refund of GST paid by it, on account of supply having not been completed due to cancellation of the agreement. An application for refund was submitted on 07.12.2022 claiming refund of GST paid for the months of October, 2020; December, 2020; March, 2021; June, 2021; September, 2021 & December, 2021.

5. It appears that the authority was not satisfied with the claim of the petitioner, therefore, a notice in Form GST-RFD-08 was issued to the petitioner. The petitioner submitted reply to show cause notice in Form GST-RFD-09. Thereafter, impugned orders in respect of different period (as stated in Para 4 above) came to be passed, which are under challenge in this petition.

6. Learned counsel for the petitioner would submit that principles of natural justice have been incorporated in statutory scheme engrafted in Rule 92 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “the Rules of 2017”), which mandatorily require the competent authority that in case it is not satisfied with claim of refund, a notice stating the reasons for proposed rejection of claim is required to be given. However, it is contended, the show cause notice in FORM GST-RFD-08 was completely non-speaking and did not incorporate any reason whatsoever. On speculative basis, the petitioner submitted reply. It was only when the final order was passed that it emerged as to what was the reason for not accepting the claim for refund. Therefore, it is contended, the order passed by the authority is in apparent violation of principles of natural justice incorporated under statutory scheme of Rule 92 (3) of the Rules of 2017. Therefore, the impugned order may be set aside and the case be remitted for consideration afresh by the competent authority.

7. Per contra, learned counsel for respondents would submit that the petitioner is raising only technical grounds. He would submit that present is not a case where no opportunity of hearing was afforded. Learned counsel would submit that the authority having formed an opinion that present was not a case for grant of refund, issued a show cause notice strictly in accordance with the provisions of Section 54 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the Act of 2017”) read with provisions contained in Rule 92 of the Rules of 2017 in prescribed proforma of GST-RFD-08. The tentative reason for not accepting the claim was also clearly stated in the notice itself. The petitioner did reply to the show cause notice and gave its version as to how it is entitled to refund. The petitioner did not raise that the notice was non-speaking or did not disclose any reason. The authority upon due consideration of the reply of the petitioner proceeded to pass the order holding that the petitioner is not entitled to refund mainly on the ground that petitioner had passed on the incidence of tax to the buyers and therefore, in such cases, it would not be entitled to refund.

8. The next submission of learned counsel for respondents is that in any case, there exists an al