SHREE RAMDOOT METLOYS PRIVATE LIMITED & ANOTHER VS. ASSISTANT COMMISSIONER OF STATE TAX & OTHERS IN THE MATTER OF REFUND REJECTION

 

SHREE RAMDOOT METLOYS PRIVATE LIMITED & ANOTHER VS. ASSISTANT COMMISSIONER OF STATE TAX & OTHERS IN THE MATTER OF REFUND REJECTION

The petitioners, involved in manufacturing and exporting ferro alloys, challenged a refund rejection order issued in Form GST RFD-06 on September 25, 2024. They claimed eligibility for a refund of integrated tax on exported goods in accordance with Rule 96 of the CGST/WBGST/IGST Rules, 2017.

The petitioners argued that under Rule 96, a shipping bill constitutes an application for a refund of integrated tax paid on goods exported out of India, contingent on filing valid returns and satisfying requirements such as the submission of a departure manifest.Rule 96(1)(b) provides that if discrepancies exist between shipping bill data and the outward supply statement in Form GSTR-1, the refund application is considered valid upon rectification.Rule 96(3) outlines that upon receiving valid returns from the GST system, the Customs system must process the refund and credit the integrated tax amount to the applicant's bank account as registered.. Grounds for Withholding Refund: Rule 96(4) provides conditions under which refunds may be withheld. If withheld under clauses (a) and (c), a system generates and sends an application in Form GST/RFD-01 to the exporter electronically, serving as a formal refund application (Rule 96(5A)).

The petitioners claimed that the system-generated refund application in Form GST RFD-01 was not identified due to the structure of the common portal, resulting in missed communication regarding the rejection of refunds and subsequent showcause notice.The State,  argued that the communication was correctly executed through the common portal as required by statutory provisions.

The Court acknowledged a possible lack of clarity in communication through the portal's structure, impairing the petitioners' ability to address the showcause notice.The judgement concluded that principles of natural justice were compromised as the petitioners did not have a fair opportunity to respond due to system communication shortcomings.The Court set aside the refund rejection order dated September 25, 2024, allowing the petitioners to respond to the showcause notice within two weeks. The responsible officer was directed to adjudicate the refund application within four weeks following the response.