SCN and Order devoid of required particulars to contest claim of erroneous refund is void

Last updated: 13 January 2025

Quick Summary

The Madras High Court has ruled that a Show Cause Notice (SCN) and subsequent order demanding payment for an erroneous refund are void if they do not provide the necessary details. The court found that the petitioner was not given a breakdown of the alleged erroneous refund amount, preventing them from adequately responding. Consequently, the impugned order was quashed and the matter was sent back for reconsideration.

Court :
Madras High Court

Brief :
The Hon'ble Madras High Court in the case Tvl. Orange Sorting Machines (India) (P.) Ltd. v. Additional Commissioner[W.P. No. 4211 OF 2024 dated February 23, 2024] allowed the writ petition and held that the SCN issued, and order passed without providing required particulars based on which refund has been rejected is void

Citation :
W.P. No. 4211 OF 2024 dated February 23, 2024

The Hon'ble Madras High Court in the case Tvl. Orange Sorting Machines (India) (P.) Ltd. v. Additional Commissioner[W.P. No. 4211 OF 2024 dated February 23, 2024]allowed the writ petition and held that the SCN issued, and order passed without providing required particulars based on which refund has been rejected is void

Facts:

Tvl. Orange Sorting Machines (India) (P.) Ltd ("the Petitioner") is engaged in the manufacturing of machines and claimed refunds of accumulated Input Tax Credit ("ITC") under inverted duty structure. However, show-cause notice dated September 22, 2023 ("the SCN") was issuedin relation to refund applied. The Petitioner in its reply dated December 18, 2023 requested for a breakup of the amount for which specified as erroneous refund. The Department without providing a breakup of the claimed amount issued an order dated December 29, 2023 ("the Impugned Order") demanding payment towards erroneous refund.

Issue:

Whether the SCN issued and order passed without providing required particulars based on which refund has been rejected is void?

Held:

The Hon'ble Madras High Court in W.P. NO. 4211 OF 2024 held as under

· Noted that, the SCN is required to provide the relevant particulars to enable the Assessee to understand the nature of alim being made against the Assessee, as it would not be possible for assessee to reply in meaning manner.

· Opined that, the SCN issued did not provide required particulars and merely stated the point of erroneous refund on account of inverted duty structure. Even after requesting, no details were provided and the Impugned Order was passed.

· Further Opined that, the Impugned Order and SCN is bereft of required particulars, thus the order calls for interference.

· Held that, the Impugned Order is quashed and matter is remitted back for reconsideration.

OFFICIAL JUDGMENT COPY HAS BEEN ATTACHED

FAQ :

The Madras High Court ruled that a Show Cause Notice (SCN) and the subsequent order demanding payment for an erroneous refund are void if they lack the required particulars.

The SCN and order were considered void because they did not provide specific details about the alleged erroneous refund, even after the petitioner requested them, thus preventing a meaningful response.

The petitioner was seeking refunds of accumulated Input Tax Credit (ITC) under an inverted duty structure.

The court quashed the impugned order and remitted the matter back to the authorities for reconsideration.