Service Tax Refund cannot be Rejected merely on Ground of Non-Filing of Reply During Covid-19 Pandemic: Bombay HC directs Readjudication [Read Order]

The Bombay High Court has held that service tax refund cannot be rejected merely on the ground of non-filing of reply during covid-19 pandemic and directed the readjudication.

Wallem Shipmanagement (India) Pvt. Ltd, the petitioner is engaged in the business of ‘placement and supply service of personnel to its customers. The Petitioner made an application for refund of Integrated Goods and Service Tax (IGST), Central Goods and Service Tax (CGST), State Goods and Service Tax (SGST) for period April 2018 to March 2019, aggregating to Rs.69,96,170/- in Form-GST-RFD-01.

On 30th September 2020, Respondent No.2 issued a show cause notice in Form RFD-08 pointing out defects/deficiency in the refund application of the Petitioner and to show cause why the refund should not be rejected. 

The Petitioner requested Respondent No.2 for extension of time to file reply to the show cause notice which was scheduled for hearing on 15th October 2020.  The reasons given in the said letter for extension of time was on account of pandemic and the refund period being old, Petitioner was in the process of fling a reply which would take sometime. Respondent No.2 granted extension of only three days as against the request of the Petitioner for two weeks.

Later the Respondent No.2 rejected the refund application of the Petitioner on the ground that the Petitioner has not replied to show cause notice. Being aggrieved by the said rejection order, the Petitioner has approached this Court.

The Petitioner has contended that Respondent No.2 was not justified in rejecting the Petitioner’s refund application without giving adequate opportunity of a hearing.  The Petitioner contended that on account of breach of natural justice, the impugned order rejecting the refund application be set aside and the matter may be restored to the file of Respondent No.2 for fresh adjudication.

A division bench Justice G S Kulkarni and Justice Jitendra Jain observed that the show cause notice was issued during the pandemic that is on 30th September 2020, certainly it could not be expected that the Petitioner could immediately reply to the same. Moreover, the Petitioner once again objected to Respondents giving only three days time and reiterated its request for at least two weeks on account of disruption due to pandemic. 

It was evident that the Petitioner has not been rejected by Respondent No.2 and, therefore, Respondent No.2 cannot be said to have given adequate opportunity of hearing to the Petitioner to reply to the show cause notice. 

The Court set aside the Order rejecting the refund application of the Petitioner.

To Read the full text of the Order CLICK HERE

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