Facts of the Case

The petitioner, Prime Export Corporation, challenged an order dated 08.04.2022 by which its claim for a GST refund of Rs. 47,07,033/- was rejected. The only reason recorded in the impugned order for the rejection was the terse phrase Forged ITC Claim, with no elaboration and, crucially, no show-cause notice issued to the petitioner before the rejection.

Issues Involved

  1. Whether a GST refund claim could be rejected on the ground of an alleged forged Input Tax Credit claim without first issuing a show-cause notice to the claimant.

Petitioner's Arguments

  • The refund of Rs. 47,07,033/- was rejected without any show-cause notice, in breach of the principles of natural justice, based only on the unexplained ground Forged ITC Claim.

Respondent's Arguments

  • Learned counsel for the respondent-revenue, after some arguments, fairly conceded that no show-cause notice had been issued, and submitted that the impugned order could be set aside with liberty to the respondent to issue a fresh show-cause notice in Form GST RFD-08, and thereafter to consider the petitioner's refund application after affording due opportunity of hearing.

Court Order / Findings

  • The Court accepted the concession and set aside the impugned order.
  • If the respondent still proposed to reject the petitioner's refund claim, it was directed to issue a show-cause notice within three weeks in the prescribed Form RFD-08.
  • The respondent was directed to process the refund claim within four weeks thereafter.
  • The Court clarified that if the claim were to be rejected, it must be by a speaking order passed after affording the petitioner due opportunity of hearing.
  • The petition was disposed of in these terms.

Important Clarification

This order does not decide whether the petitioner's Input Tax Credit claim was actually genuine or forged — it only ensures that before the GST department can reject a refund on such a serious allegation, it must first issue a proper show-cause notice in the statutorily prescribed format (Form RFD-08) and give the taxpayer a chance to respond, followed by a reasoned, speaking order. Taxpayers facing a bare, unexplained refund rejection should check whether a Form RFD-08 notice was ever issued to them.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — provisions governing GST refunds and the requirement of a show-cause notice before rejection of a refund claim.
  • CGST Rules, 2017 — Rule 92, prescribing Form GST RFD-08 as the notice for proposed rejection of a refund claim.

Decision – In Favour of

Decided in favour of the petitioner on the procedural point; the impugned rejection order was set aside, with the department directed to follow due process (Form RFD-08 notice and a hearing) before any fresh decision on the refund claim.

Case Details

Court: High Court of Delhi at New Delhi
Case No.: W.P.(C) 1892/2023
Coram: Hon'ble Mr. Justice Vibhu Bakhru and Hon'ble Mr. Justice Amit Mahajan
Date of Order: 28.04.2023

Link to Download the Order

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