The rejection of a refund claim without affording the claimant an opportunity of being heard violates the principles of natural justice and the provisions of the Central Goods and Service Tax Act, 2017 and the Central Goods and Service Tax Rules, 2017.

JUDGMENT :

Sanjeev Kumar, J.

1. The petitioner is aggrieved of and has called in question the refund rejection order passed by respondent No.1 on 02.12.2020 on the ground that the same besides being in utter disregard of the provisions of the Central Goods and Service Tax Act, 2017 ["the Act"] and the Rules framed thereunder, is also in violation of the principles of natural justice.

2. It is submitted that the petitioner having become entitled for refund of excess tax paid in term of Section 54 of the Act, submitted a refund claim before respondent No.1 in FORM-GST-RFD-06. Respondent No.1 instead of directing the refund issued a show cause notice calling upon the petitioner to show cause as to why his refund claim to the extent of amount claimed should not be rejected or the amount erroneously refunded should not be recovered for the reason that the claim for refund is belated having been filed after the expiry of two years from the relevant date, as per explanation in Section 54(1) of the Act and that in the instant case the period had expired in April, 2020.

3. The petitioner replied to the show cause notice and explained the delay. He relied upon notification No.35/2020-Central Tax dated 03.04.2020 and Notification No.55/2020-Central Tax dated 27.06.2020 issued by respondent No.3, whereby due to outbreak of corona virus pandemic, time limit/due date for various compliances has been extended up to 31.08.2020. The explanation on delay by the petitioner in light of the aforesaid notifications of respondent No.3 was accepted and accordingly, the application of the petitioner for refund was processed by respondent No.1. He, however, without serving further show cause notice upon the petitioner, determined the claim for refund and in terms of the order impugned dated 02.12.2020 rejected the same being not tenable in law. It is this order of respondent No.1 dated 02.12.2020, which is assailed in this petition.

4. As is noticed in the beginning, the impugned order has been assailed primarily on the ground that no opportunity of being heard was ever granted to the petitioner before passing the impugned order. The show cause notice issued to the petitioner was only with respect to his claim being barred by limitation and the same was explained by the petitioner by filing written response. The explanation tendered by the petitioner was accepted by respondent No.1. It is, thus, contended that once the claim of refund filed by the petitioner was found to be within time, it was incumbent upon respondent No. 1 to put the petitioner again on show cause notice as to the merits of the claim, once it had proposed to reject the refund claim.

5. Learned counsel for the petitioner has invited our attention to Section 54 of the Act and Rule 92 of the Central Goods and Service Tax Rules, 2017 ["the Rules of 2017"], wherein it is specifically provided that no order rejecting the claim of refund shall be passed unless the person claiming refund is given an opportunity of being heard.

6. Mr. D.C. Raina, learned Advocate General appearing for the respondents takes a preliminary objection with regard to the maintainability of the petition. He contends that in view of the availability of alternative remedy against the impugned order under Section 107 by way of appeal before the Appellate Authority, this Court ought not entertain this petition.

7. Having heard learned counsel for the parties and perused the record, we find it appropriate to first deal with the objection raised by Mr. Raina, learned Advocate General.

8. It is true that any order passed by the adjudicating authority including an order passed under Section 54 of the Act read with Rule 92 of the Rules of 2017 is appealable before the appellate authority and the appellate authority is empowered to make such further enquiry, as may be necessary and pass such order as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against, but shall have no power to remand