Maharashtra GST Tribunal Remands 39 Cotton Exporter Refund Appeals After ITC Rejections Without Required RFD-08 Notices

M/s. Lavino Kapur Cottons Pvt. Ltd., represented by its director Vikram Inderjit Kapur, filed 39 appeals concerning partial rejection of refund claims for tax periods from June 2019 to September 2022.

The company, a 100% EOU exporting its products, claimed refunds of accumulated ITC. In the lead appeal, concerning August 2020, the authority partially rejected the claim on the stated ground of “Mismatch of ITC,” without issuing a notice in FORM GST RFD-08 or providing a hearing.

The First Appellate Authority acknowledged that no notice had been issued but upheld the rejection, relying in part on the appellant’s failure to produce specified documents at the appellate hearings.

The Revenue admitted the omission but argued that the appellate hearings had afforded an effective opportunity to the appellant.

1. Whether a partial refund rejection without the notice and hearing prescribed by Rule 92(3) of the CGST/MGST Rules violates that rule and the principles of natural justice.

2. Whether an opportunity to be heard at the appellate stage can cure the failure to issue the prescribed notice before the original adverse decision.

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 a refund claim wholly or partly, to issue notice in FORM GST RFD-08, allow the applicant to reply in FORM GST RFD-09, consider the reply, and provide an opportunity of being heard; the Tribunal treated these requirements as mandatory.

The Tribunal also applied the audi alteram partem principle, holding that a pre-decisional statutory notice and hearing cannot be replaced by a post-decisional hearing on appeal.

It referred to Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan for the requirement that quasi-judicial authorities act fairly, follow prescribed procedures, and issue reasoned orders.

The absence of FORM GST RFD-08 and a hearing before the refund rejection was admitted and undisputed.

Because Rule 92(3) makes notice and hearing prerequisites to rejection, the appellate hearings did not cure the original procedural defect: they did not provide the appellant the prescribed opportunity to know and answer the specific grounds before the adverse order was made.

The First Appellate Authority therefore should have remanded the matters rather than confirming the rejection based on documents sought at the appellate stage.

The Tribunal did not decide whether the alleged ITC mismatch was substantively valid or whether the COVID-19-related relief applied.

It set aside the impugned appellate orders and the corresponding original orders insofar as they rejected the refund claims, and remanded all 39 matters for de novo processing.

On remand, if any part of a claim is considered inadmissible, the authority must issue a detailed FORM GST RFD-08, allow a reply in FORM GST RFD-09, provide a personal hearing, and pass a reasoned order in FORM GST RFD-06, in accordance with law.

The appeals were allowed by way of remand.