Refund Application should not be rejected merely on the ground that the required documents are not supplied

The Delhi High Court has ruled that tax authorities cannot reject refund applications simply because the applicant failed to supply all required documents. In the case of Mittal Footcare, the court found that the Revenue Department should have sought further clarification or additional documents instead of outright rejection. The High Court set aside the previous orders and sent the matter back for re-adjudication, emphasising that curable defects should not lead to automatic denial of a refund.

The Hon'ble Delhi High Court in the case of Mittal Footcare v. Commissioner of Central Goods and Services Tax [W.P. (C) No. 15518 of 2023 dated January 4, 2024] allowed the writ petition and held that, the refund cannot be rejected by the Revenue Department merely on the ground of non-supply of authenticated documents. The Revenue Department has the option to call for further clarification or documents as required to satisfy itself that refund is due and payable.

Facts

Revenue Department ("the Respondent") rejected the application for the refund ("the Application") filed by Mittal Footcare ("the Petitioner") as per Order-in-Original ("the Order") for seeking the refund on the Input Tax Credit ("the ITC") for the period of April, 2021 to March, 2022 ("the Period"). The application was rejected on the ground that, there was a mismatch of turnover, excess availment, misdeclaration of invoice value, and no supporting documents to disprove the said grounds. Aggrieved by the Order, the Petitioner filed an appeal before the Respondent Appellate Authority which was dismissed by the Respondent vide Appellate Order ("the Impugned Order"). 

The Petitioner contends that, no personal hearing was granted contrary to the observations made in the Order. Also, the Petitioner states that, though Petitioner has uploaded the relevant documents, however, the Order states that, the required documents have not been submitted. Further, the Petitioner contends that, there appears to be technical glitch in the system of the Respondent as the Petitioner has uploaded the documents.  

Issue

Whether the application for refund should be rejected merely on the ground that the required documents are not supplied?

Held

The Hon'ble Delhi High Court in the case of W.P. (C) No. 15518 of 2020 held as under:

• Observed that, Section 54(1) of the Central Goods and Services Tax Act, 2017 ("the CGST Act") provides for a period of two years for filing an application seeking refund. As the relevant Period in issue is within the limitation prescribed under Section 54(1) of the CGST Act. 
• Noted that, the Annexure B filed along with the Appeal filed, though neither unauthenticated nor signed, is a curable defect and the Petitioner could have been called upon by the Respondent Appellate Authority to certify the documents or produce further material in the form of vouchers, bill etc. to substantiate the said document. 
• Opined that, the refund cannot be rejected by the Respondent merely on the grounds of non-supply of authenticated documents. The Respondent has the option to call for further clarification or documents as required to satisfy itself that refund is due and payable. 
• Held that, the Order and the Impugned Order is set aside.
• Directed that, the matter be remitted back to the Respondent Adjudicating Authority for re-adjudication.