GST Refund of Input tax Credit - Export of services under LUT - Refund claim cannot be rejected more than the amount mentioned in the Show cause notice
Scope of Order cannot be enhanced what was stated in the show cause notice
Facts of the Case
- The taxpayer is engaged in providing customer solution service and the majority of the persons whom it serves are located outside India. Such services categorically fall under the ambit of “Export of Service” under the GST Legislation. Thus, the taxpayer is eligible to claim the refund on input tax credit as it supplies the service outside India exercising the option to export the service under the letter of undertaking.
- The taxpayer has filed the GST refund application of unutilized input tax credit amounting to INR 2,84,04,175/- under the GST legislation. The authority issued a show cause notice on 18.03.2021 under Rule 92(3) of the CGST Rules, 2017 in Form GST RFD-08 proposing the rejection of the refund application to the extent of Rs.36,85,893/-. Thus the show cause notice limited itself to the rejection of the refunds to the extent of the said amount of Rs.36,85,893/- out of the total refund claim of Rs.2,84,04,175/-
- Later, the newly appointed officer rejected the entire claim for a refund without providing the opportunity of being heard.
Prayer before Hon’ble Court
The taxpayer filed the writ petition before the Hon’ble Gujarat High Court with the inter-alia the following prayer
This Hon'ble Court be pleased to issue a writ of or in the nature of a mandamus or any other appropriate writ, order or direction quashing and setting aside the order dated May 11/12,2021 passed by the respondent herein and directing the respondent to restrict himself to the adjudication limited to the scope of the show cause notice dated March 16/18, 2021 which is limited to the balance amount of Rs,.36,85,893/-.
High Court Observation
- It is quite obvious and barely there arises any need for the Court to elaborate that once a show cause notice for the refund claim of Rs.36,85,893/- is issued at the best, the rejection that can be made is for the amount for which the show cause notice is issued and surely not for any higher amount than specified in show cause notice. It is quite obvious that is a gross and apparent mistake that the authority concerned has traveled beyond the scope of show cause notice. That itself is valid and opt ground for the Court to interfere.
- Non-Availment of the opportunity of hearing, more particularly when it affects adversely the petitioner and exceeds the scope of show cause notice, the order deserves indulgence.
Author Opinion
- Hon’ble Court reiterated the cardinal principle of indirect tax legislation that the scope of order cannot be beyond the scope defined in show cause notice. However, it is interesting to note that the Hon’ble High Court issued a writ despite the fact that the taxpayer has already filed the appeal before the Appellate authority which was pending for hearing against the given order.
Source - Ttec India Customer Solutions ... vs Deputy Commissioner Of Sales Tax