The Hon'ble Bombay High Court in M/S Colgate Global Business Services vs. Union of India & Ors. [WRIT PETITION NO. 802 OF 2021] has set aside the Order rejecting GST Refund as no reason was stated by the deputy commissioner of state tax. The Hon'ble Court said that respondent has rejected the application for refund without recording any reasons, though the same is mandatory under Rule 92(3) of the Central Goods and Services Tax Rules, 2017. The Order passed by the Respondent is in breach of the said provisions and deserves to be granted and set aside.

1. Petitioner : Colgate Global Business Services Pvt. Ltd.

2. Respondents : 1. The Union Of India ] Through the Ministry of Finance, ] Department of Revenue, ] having its Office at Udyog Bhavan,] New Delhi - 110 011.]
2. Commissioner of State Tax ] GST Bhavan, New Building, Mazgaon ] Mumbai - 400 010. ]
3. Deputy Commissioner of State Tax ] MUM-VAT-E-103, Mumbai Nodal ] Division 12, 2nd Floor ] GST Bhavan, New Building, Mazgaon ] Mumbai - 400 010.

3. Appeal Type/ No. : WRIT PETITION NO. 802 OF 2021

4. CORAM : 1. HON'BLE MR. JUSTICE R. D. DHANUKA, 2. HON'BLE MR. JUSTICE S. M. MODAK, JJ.

5. Council For Petitioners : Mr.Jitendra Motwani a/w. Ms.Rinky Jassuja i/b. M/s. Economic Laws Practice

6. Council For Respondents : Mr.Jitendra B. Mishra a/w. Ms.Sangeeta Yadav for Respondent No.1. , Ms.Jyoti Chavan, A.G.P. for Respondent Nos.2 & 3.

7. Date of pronouncement : JANUARY 25, 2022

8. Facts:

Colgate Global Business Services Pvt. Ltd. ("the Petitioner") has filed the pitition under Article 226 of the Constitution of India and challenged the Order dated 15th June 2020 ("Impugned order") passed by Deputy Commissioner of State Tax (the Respondent No.3) thereby rejecting the application for refund made by the Petitioner.

The Petitioner has challenged the said impugned Order mainly on the ground that the Respondent No.3 was bound to record reasons in the Order while rejecting the application for refund in view of Rule 92(3) of the Central Goods and Services Tax Rules, 2017.

A Perusal of the impugned Order indicates that the Respondent No.3 has rejected the application for refund without recording any reasons, though the same is mandatory under Rule 92(3) of the Central Goods and Services Tax Rules, 2017.

The Hon'ble Bombay High Court viewed that the Order passed by the Respondent No.3 is in breach of the said provisions and deserves to be granted and set aside.

Ms.Chavan, learned A.G.P. for Respondent Nos.2 & 3, on instructions, stated that the Respondent No.3 would pass a fresh Order in compliance with Rule 92(3) of the Central Goods and Services Tax Rules, 2017 after rendering an opportunity to the Petitioner of being heard expeditiously.

The division bench of Justice S.M.Modak and Justice R.D.Dhanuka accepted the statement.

9. Nature of Issue : Order sanctioning refund, Order under Rule 92(3) under the Central GST Act.

Providing reasons is mandatory to pass the order under Rule 92(3) under the Central GST Act.

10. Industry : Not industry specific

11. Held:

The division bench of Justice S.M.Modak and Justice R.D.Dhanuka held on January 25, 2022 that Impugned Order dated 15th June 2020 passed by the Respondent No.3 is quashed and set-aside. The application for refund made by the Petitioner for the period July 2017 to March 2018 for the sum of Rs.4,33,03,066/- is restored to file before the Respondent No.3.

The Petitioner is directed to remain present before the Respondent No.3 for personal hearing on 2nd February 2022 at 11.00 am.

The court directed the Respondent No.3 to pass a fresh Order without being influenced by the observations made and the conclusions drawn in the impugned Order dated 15th June 2020 and in accordance with law expeditiously and not later than three weeks from the date of granting personal hearing to the Petitioner.

The court further ordered that the Order that would be passed by the Respondent No.3 shall be conveyed to the Petitioner within one week from the date of passing of the said Order. If refund application is allowed, the Respondent No.3 shall refund the amount due to the Petitioner within two weeks from the date of passing of such Order. If the Order is adverse against the Petitioner, the Petitioner would be at liberty to file appropriate proceedings.

12. In favour of : Petitioner

13. Case Law Refereces -

14. Relevant Act/ Rules/ Forms : Rule 92(3) of the CGST Rules, 2017

Rule 92(3) of the Central Goods and Services Tax Rules, 2017, read as - "(3) Where the proper officer is satisfied, for reasons to be recorded in writing, that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in FORM GST RFD-08 to the applicant, requiring him to furnish a reply in FORM GST RFD-09 within a period of fifteen days of the receipt of such notice and after considering the reply, make an order in FORM GST RFD-06 sanctioning the amount of refund in whole or part, or rejecting the said refund claim and the said order shall be made available to the applicant electronically and the provisions of sub-rule (1) shall, mutatis mutandis, apply to the extent refund is allowed:
Provided that no application for refund shall be rejected without giving the applicant an opportunity of being heard."

15. Database Citation : HC-GW-19-2022-MH