Refund of ITC cannot be rejected without providing an opportunity of being heard to the assessee

Last updated: 13 March 2023

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The Rajasthan High Court has ruled that tax authorities cannot reject a claim for a refund of accumulated Input Tax Credit (ITC) without first providing the assessee with an opportunity to be heard. The court emphasised that a failure to follow the principles of natural justice at the initial stage cannot be rectified by adhering to them at the appellate stage. Consequently, an order rejecting an ITC refund claim was quashed and the matter was sent back for fresh consideration.

Court :
Rajasthan High Court

Brief :
The Hon'ble Rajasthan High Court in M/s. Chandni Crafts v. Union of India and Anr.[D. B. Civil Writ Petition No. 5460/2020 dated January 17, 2023] has quashed and set aside the order rejecting the refund claim of accumulated Input Tax Credit ("ITC") on the grounds that the assessee was not given the opportunity of hearing by the Revenue Department. Further viewed that it is a well settled law that a failure of natural justice in the authority of the first instance cannot be cured by the sufficiency of natural justice in the appellate body. While allowing the writ petition, the Court quashed the impugned order. The matter was remanded back to the adjudicating authority to follow the provisions of Rule 92(3) of the Central Goods and Services Tax Rules, 2017 ("the CGST Rules").

Citation :
D. B. Civil Writ Petition No. 5460/2020 dated January 17, 2023

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