Cotton Exporter’s 39 Partial GST Refund Rejections Set Aside, Sent Back After Tribunal Finds Rule 92(3) Notices Were Skipped

M/s. Lavino Kapur Cottons Pvt. Ltd., a 100% Export Oriented Unit, claimed refunds of accumulated input tax credit for multiple tax periods from June 2019 to September 2022.

The Deputy Commissioner partially rejected the claims on the ground of “Mismatch of ITC” without issuing a notice in Form GST RFD-08 or providing a hearing.

The Joint Commissioner (Appeals) acknowledged the procedural omission but upheld the rejections, relying in part on documents the appellant had not produced during appellate hearings.

The appellant filed 39 appeals before the Tribunal; the August 2020 refund claim was treated as the lead case.

1. Whether partial rejection of a refund claim without issuing Form GST RFD-08 and providing an opportunity to be heard violates Rule 92(3) and the principles of natural justice

2. Whether an appellate-stage hearing can cure the failure to provide notice and a hearing at the adjudication stage

3. Whether the matters should be remanded for fresh proceedings in accordance with law

Rule 92(3) of the CGST/MGST Rules requires the proper officer, before rejecting any part of a refund claim, to issue notice in Form GST RFD-08, invite a reply in Form GST RFD-09, consider that reply, and provide an opportunity of hearing.

The Tribunal treated these requirements as mandatory, applying the principles of natural justice, including audi alteram partem; it also referred to Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan for the requirement that quasi-judicial authorities act fairly, follow prescribed procedure, and give reasoned decisions.

The Tribunal found it undisputed that the adjudicating authority issued the refund order without Form GST RFD-08 or a hearing.

Because Rule 92(3) mandates these steps, the appellant was deprived of an opportunity to learn the specific grounds for the alleged ITC mismatch and respond before the adverse decision.

The Tribunal rejected the Revenue’s argument that appellate hearings cured the defect: a post-decisional opportunity could not replace the prescribed pre-decisional notice and hearing.

It therefore did not decide the substantive ITC-mismatch or COVID-19-relief issues.

If any part of a claim is proposed for rejection, the adjudicating authority must issue a detailed Form GST RFD-08 notice, allow a reply in Form GST RFD-09, provide a personal hearing, and pass a reasoned order in Form GST RFD-06.

The appeals were allowed by way of remand.