Facts of the Case

The petitioner, Richie Rich Exim Solutions, filed a writ petition seeking quashing of the refund rejection order dated 30.12.2020 passed by the Assistant Commissioner, CGST Delhi South. The refund amount claimed was ₹98,54,248/- under CGST, SGST, and Cess for the period September 2020 relating to export transactions.

The grievance of the petitioner was that the refund application was rejected without granting a personal hearing, which is mandatory under the proviso to Rule 92(3) of the CGST Rules, 2017.

The respondent contended that a hearing was scheduled on 29.12.2020, but the petitioner failed to appear. However, the petitioner denied receiving any such notice and relied upon the audit trail to show that no such hearing was reflected.

Issues Involved

  1. Whether rejection of a GST refund application without granting a personal hearing violates Rule 92(3) of the CGST Rules, 2017.
  2. Whether the respondent discharged the burden of proving that an opportunity of hearing was provided.
  3. Whether rejection of refund merely on the ground of supplier being “risky” is legally sustainable.
  4. Whether such rejection violates principles of natural justice.

Petitioner’s Arguments

  • No personal hearing was granted before rejecting the refund application, violating mandatory provisions of Rule 92(3).
  • The GST portal accessible to the petitioner did not show any scheduled hearing.
  • Audit history generated by the respondent itself did not reflect any hearing date, disproving respondent’s claim.
  • The rejection order lacked proper reasoning and was based solely on the vague ground that the supplier was “risky.”
  • Only 7 days were provided to respond to the show cause notice instead of the statutory minimum of 15 days. 

Respondent’s Arguments

  • A personal hearing was scheduled on 29.12.2020 at 3:00 PM, but the petitioner failed to appear.
  • The rejection order was justified based on system-generated data and findings recorded in the impugned order.

Court’s Findings / Order

The Delhi High Court held:

  • The respondent failed to establish that a personal hearing was actually granted.
  • The audit history contradicted the respondent’s claim regarding scheduling of hearing.
  • Rule 92(3) of the CGST Rules mandates granting an opportunity of hearing before rejecting a refund application.
  • Non-compliance amounts to a violation of principles of natural justice.
  • The rejection order lacked proper reasoning and merely stating that the supplier is “risky” is insufficient.

Final Order

  • The impugned refund rejection order dated 30.12.2020 was set aside.
  • The respondent was directed to:
    • Provide a proper opportunity of personal hearing
    • Issue a fresh notice with date, time, and venue
    • Pass a reasoned (speaking) order after hearing
    • Complete proceedings within the prescribed timeline

Important Clarification by Court

  • Personal hearing is mandatory, not discretionary, before rejecting refund claims under GST.
  • The burden lies on the department to prove that such opportunity was granted.
  • Vague grounds like “risky supplier” without detailed reasoning are not legally sustainable.
  • Proper adherence to statutory timelines and procedural safeguards is essential.

Sections / Rules Involved

  • Rule 92(3) of the Central Goods and Services Tax Rules, 2017
  • Section 56 of CGST Act (Interest on delayed refund)


 Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1216-DB/RAS30032022CW111382021_143848.pdf

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