The Court emphasized the importance of adhering to the principles of natural justice in administrative inquiries and directed the Appellate Authority to reconsider the refund claim.

JUDGMENT :

Arup Kumar Goswami, J.

Heard Mr. Rahul Tangri, learned Counsel for the petitioner. Also heard Mr. B.K. Gupta, learned Counsel appearing for the respondents.

2. The petitioner is a Private Limited Company engaged in the supply of patented and propriety medicines falling under Chapter 29 and 30 of the Customs Tariff Act, 1975, made applicable to the supplies made under the Central Goods and Services Act, 2017 (for short, the CGST Act). It has two Units in the State of Sikkim, one of which is located at Nandok Block and the other at Namli Block, which will, hereinafter be referred to as Unit-I and Unit-II, respectively. Both the Units are registered under General Sales Tax Index (GSTI) vide GSTI number.

3. It is the case of the petitioner that during the month of August, 2017 two consignments of pine bark extract and Crospovidone NF were transferred by the petitioner from Unit-II to Unit-I. As the transfer did not qualify as supply in terms of Section 7 of the CGST Act, such transfer ought to have been effected under the cover of a delivery challan but, inadvertently two invoices bearing No. S 11725000335 dated 14.08.2017 and S 11725000354 dated 17.08.2017 came to be issued. Having realized the mistake, the transfers were not declared as “outward supply” in the Form GSTR-01 for the month of August, 2017. However, at the time of filing of the GSTR-3B return for the month in question, the petitioner inadvertently took these two invoices into consideration and discharged GST amounting to Rs.15,82,938.72 and Rs.1,659.42, respectively, totalling Rs.15,84,598/-. Subsequently, the petitioner filed an online application dated 01.12.2018 in Form GST RFD-01A under Section 54 of the CGST Act seeking refund of such amount. The acknowledgment copy along with all annexures including a copy of the certificate of Chartered Accountant certifying that the petitioner had not passed incidence of tax to any other person was physically delivered before respondent no.2 on 04.12.2018. Respondent no.2, thereafter issued a Show Cause Notice (for short, SCN) dated 08.03.2019 for rejection of application for refund in Form GSTRFD-08 with reference to Rule 92(3) of the Central Goods and Services Tax Rules, 2017 (for short, the CGST Rules), asking the petitioner to show cause within 15 days from the date of receipt of notice with further direction to appear before the Assistant Commissioner of Gangtok Division, Siliguri GST Commissioner ate on 27.03.2019, indicating therein that in case the petitioner failed to furnish the reply or failed to appear as stipulated, the case would be decided ex-parte on the basis of available records on merit.

4. The petitioner submitted reply dated 27.03.2019 to the SCN for rejection of application for refund and had requested for processing the refund claim on the basis of clarification and reply furnished by sanctioning the amount in cash or by sanctioning direct credit in the Input Tax Credit (for short, ITC) credit ledger on portal of the amounts in question in their respective heads of GST Taxes. Representative of the petitioner also appeared for personal hearing in terms of SCN and thereafter, respondent no.2 passed an order dated 01.04.2019/02.04.2019 in Form – GST-RFD-06 under Rule 92(1) of the CGST Rules, 2017 read with Section 54 and Section 56 of the CGST Act rejecting the prayer holding that there was no provision under GST Act and GST Rules for refund of excess payment of tax, if payment was made through ITC.

5. An appeal was preferred by the petitioner before the Commissioner (Appeals), CGST and Central Excise, Siliguri on 01.07.2019, who passed an order dated 11.09.2019 holding that the ground of rejection of the refund claim in the impugned order was erroneous. However, after an examination as to whether or not any excess payment of tax had actually occurred in the case, rejected the appeal by holding that there is no requirement of refund.

6. Therefore, recourse is taken to redress the grievance of the peti