Refund application cannot be rejected without giving a proper opportunity

Last updated: 12 August 2023

Save Share

Quick Summary

The Bombay High Court has ruled that a refund application cannot be rejected without providing a reasonable opportunity for the applicant to respond to a Show Cause Notice. In this case, the petitioner requested more time to reply due to the pandemic, but was only granted three days, which the court deemed insufficient. The court set aside the rejection order, upholding the principle of natural justice.

Court :
Bombay High Court

Brief :
The Hon'ble Bombay High Court in the matter of M/s.Wallem Shipmanagement (India) Pvt. Ltd. v. The Union of India & Ors [Writ Petition no.3460 of 2021 dated July 11, 2023] set aside the order of Adjudicating Authority of not granting refund and held that the assessee should have given time to file reply since the notice was issued during the pandemic period.

Citation :
Writ Petition no.3460 of 2021 dated July 11, 2023

The Hon'ble Bombay High Court in the matter of M/s.Wallem Shipmanagement (India) Pvt. Ltd. v. The Union of India & Ors [Writ Petition no.3460 of 2021 dated July 11, 2023] set aside the order of Adjudicating Authority of not granting refund and held that the assessee should have given time to file reply since the notice was issued during the pandemic period.

Facts

M/s. Wallem Shipmanagement (India) Pvt. Ltd ("the Petitioner") is engaged in the business of placement and supply service of personnel. The Petitioner filed the refund application dated March 30, 2020.

A Show Cause Notice ("the SCN") wasissued by the Revenue Department ("the Respondent") on September 30, 2020 to show cause that why refund application should not be rejected.

The Petitioner vide letter dated October 14, 2020 requested for the extension of time period for filing a reply of the SCN stating that the assessee is being old man and due to Pandemic, it take some time to file a reply. The Respondent has granted only three days extension to the Petitioner for filing a reply against the 2 week time period sought by the Petitioner.

The Respondent after 3 days vide an order dated October 20, 2020 ("the Impugned Order") rejected the refund application of the Petitioner on the grounds of non reply of the SCN.

Aggrieved by the Impugned Order, the Petitioner filed a writ before the Hon'ble Bombay High Court praying to quash the impugned order being violative of principle of natural justice.

Issue

Whether the refund application can be rejected without giving a proper time for reply of SCN?

Held

The Hon'ble Bombay High Court in Writ Petition no.3460 of 2021 held as under:

Noted that, the reason furnished by the Petitioner to seek extended time to file a reply to the SCN on account of pandemic was a sufficient reason.
Noted that, the Respondent gave only three days to file the reply, which cannot be termed as reasonable time or an adequate opportunity of a hearing to the Petitioner.
Held that, the Petitioner was not granted the proper opportunity for replying of the SCN.
Set aside the Impugned order being violative of principle of natural justice.

FAQ :

No, the Bombay High Court has held that a refund application cannot be rejected without giving the applicant a proper opportunity to reply to any Show Cause Notice issued.

The case involved M/s. Wallem Shipmanagement (India) Pvt. Ltd. whose refund application was rejected for not replying to a Show Cause Notice.

The petitioner requested an extension to file their reply to the Show Cause Notice due to the COVID-19 pandemic, stating it was difficult to respond promptly.

The petitioner requested two weeks but was only granted three days by the Revenue Department to file their reply.

The Bombay High Court set aside the order rejecting the refund application, stating that the three-day period was not reasonable and violated the principle of natural justice.