GST Tribunal Remands 39 Lavino Kapur Export-Refund Claims After Tax Officer Partly Rejected Them Without Required RFD-08 Notices

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

In the lead appeal concerning August 2020, the Adjudicating Authority partially rejected the refund claim, citing “Mismatch of ITC,” without first issuing a notice in Form GST RFD-08 or providing a hearing. The First Appellate Authority acknowledged that omission but upheld the rejection after the appellant did not produce certain documents during appellate hearings. The appellant challenged the orders before the Tribunal, relying on the mandatory procedure under Rule 92(3) and, on the merits, on the COVID-period relaxation concerning Rule 36(4).

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 a failure to follow the prescribed procedure at the adjudication stage can be cured by providing a hearing at the appellate stage.

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

Rule 92(3) of the CGST/MGST Rules, 2017 requires the proper officer, before rejecting any part of a refund claim, to issue Form GST RFD-08, require a reply in Form GST RFD-09, consider that reply, and provide an opportunity of being heard; the rule’s use of “shall” and its proviso make these procedural safeguards mandatory.

The Tribunal also applied the principles of natural justice, including audi alteram partem, and relied on Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan for the requirement that quasi-judicial authorities act fairly, follow prescribed procedures, and give reasoned decisions.

The Adjudicating Authority had directly issued the refund sanction/rejection order without Form GST RFD-08 or a hearing, an omission admitted by the Revenue.

The Tribunal held that a hearing at the appellate stage could not substitute for the required pre-decisional notice and hearing, which would have enabled the appellant to know the specific grounds for the alleged ITC mismatch and respond with supporting material.

Because the First Appellate Authority recognized the procedural defect but decided the merits instead of remanding the matter, the Tribunal found the original rejection and the appellate order unsustainable. It therefore did not decide the substantive ITC-mismatch or COVID-relief arguments.

On remand, the Adjudicating Authority must issue a detailed Form GST RFD-08 if any refund is proposed to be rejected, allow a reply in Form GST RFD-09, provide a personal hearing, and pass a reasoned order in Form GST RFD-06.