Facts of the Case

M/s Bishnu Flour Mills Pvt. Ltd., through its Director Vivek Agrawal (son of Pradip Kumar Agrawal), sought quashing of an appellate order dated 09.09.2024 rejecting its appeal under Section 107 of the BGST Act, 2017 on the ground of non-payment of 10% pre-deposit, and of an order dated 16.05.2024 rejecting its refund application in Form GST RFD-01 for unutilised ITC on export of goods and services without payment of IGST. The petitioner's case was that the appeal did not involve any disputed tax amount — it concerned a refund claim — so no pre-deposit was payable. The underlying dispute traced back to an order dated 08.05.2024 demanding Rs 97.28 lakh, referable to a CAG audit para for 2008-09, without the petitioner ever being furnished the CAG report or a demand notice explaining how the figure was computed.

Issues Involved

  1. Whether an order rejecting a refund application, which fails to disclose how the demanded/adjusted figure was arrived at, qualifies as a valid, reasoned quasi-judicial order.
  2. Whether an appeal against rejection of a refund claim can be dismissed for non-payment of the statutory pre-deposit meant for disputed tax demands.
  3. Whether reliance on a CAG report never furnished to the assessee vitiates the adjudication.

Petitioner's Arguments

  • The Rs 97.28 lakh figure attributed to the petitioner was never explained — no split of tax, interest or penalty, and no supporting document was ever supplied.
  • The refund claim did not involve any admitted or disputed tax demand from the petitioner, so the 10% pre-deposit condition for filing an appeal should not have applied.
  • The CAG report on which the demand was based was never furnished, despite repeated requests, denying the petitioner a fair opportunity to respond.
  • An earlier order dated 05.04.2024 by the same Joint Commissioner had itself allowed the refund and directed issuance of RFD-06, before it was reversed without fresh evidence.

Respondent's Arguments

  • The Appellate Authority's rejection for non-compliance with the statutory pre-deposit requirement under Section 107 was in order.

Court Order / Findings

  • The order dated 08.05.2024 did not disclose how the authority arrived at the Rs 97.28 lakh figure — there was no split material information, making it a non-speaking order.
  • Relying on Oryx Fisheries Pvt. Ltd. v. Union of India, (2010) 13 SCC 427, and the principles in Kranti Associates, the Court reiterated that a quasi-judicial authority must record cogent, clear reasons; a 'rubber-stamp' order is not a valid decision.
  • Since essential ingredients of a reasoned order were missing, both the original order dated 08.05.2024 and the Appellate Authority's order were set aside.
  • The authority was directed to pass a fresh, detailed, speaking order after affording an oral hearing to the petitioner, to be completed within three months from receipt of the order.
  • The petitioner was directed to cooperate in the fresh proceedings.

Important Clarification

  • An order demanding tax or rejecting a refund on the strength of a CAG audit para must independently disclose the reasoning and supporting material — an unexplained lump-sum figure is not sustainable.
  • A quasi-judicial order affecting civil rights must satisfy the recognised tests of a reasoned decision (Kranti Associates/Oryx Fisheries): cogency, transparency and disclosure of the basis for the conclusion.
  • Where the core issue involves a refund claim rather than an admitted tax dispute, the pre-deposit bar under Section 107 warrants closer scrutiny before an appeal is rejected on that ground alone.

Sections Involved

  • Section 54, CGST Act, 2017 — refund of tax, including unutilised ITC on zero-rated exports.
  • Section 107, BGST/CGST Act, 2017 — appeals to the Appellate Authority and the pre-deposit condition.

Decision – In Favour of

In favour of the Assessee — both the original and appellate orders are quashed as non-speaking, with the matter remanded for a fresh, reasoned order after an oral hearing.

Case Details

High Court of Judicature at Patna; Civil Writ Jurisdiction Case No. 18879 of 2024; Coram: Hon'ble Mr. Justice P. B. Bajanthri and Hon'ble Mr. Justice Alok Kumar Pandey; Order dated 29.07.2025.

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