Telephonic conversation no substitute for personal hearing in GST says Bombay HC
In an interesting case of Bombay High Court Writ Petition (L) No.3264 Of 2020 dated BA Continuum India Pvt. Ltd. vs. UOI & Ors it was held that Mere telephonic conversation no substitute for personal hearing
Facts of the case
Petitioner is a company that is engaged in the business of providing information technology and information technology-enabled services to customers located outside India. It has its registered office in Mumbai. It had migrated from service tax registration to GST registration and was allotted GST identification number in the State of Maharashtra
Company had entered into a master agreement with Bank of America National Association (for short ‘BANA’ hereinafter), a national banking association incorporated under the laws of United States of America. The agreement was entered into to provide for information technology and information technology-enabled services by the petitioner
Petitioner filed 5 refund applications and claimed a refund of unutilized ITC u/s 16(3) amounting to ₹ 9.58 crores. However the Revenue rejected the refund claim on alleged that since the petitioner was an intermediary u/s 2(13), the place of supply would be India which further disqualifies the supply of services provided by the assessee to be treated as ‘export of services.
Because of outbreak of coronavirus pandemic, it is stated that offices of the petitioner and its consultants were closed. As a result, petitioner could not collect the required documents and, therefore, it sent emails seeking additional time for submission of documents. Revenue instructed the petitioner to submit the documents within three days failing
which it was mentioned that the matter would be decided ex-parte
Petitioner responded via e-mail dated 24.04.2020 bu filinf detailed submissions requesting to grant personal hearing while decing the show cause notices and further stating that Trade Circular No.3T of 2020 dated 17.03.2020 would not be applicable to the case of petitioner.
The orders were passed by revenue rejecting the refund applications filed by the petitioner.
Order by HC
HC observed that the Trade Circular dated March 17, 2020 which dealt with time-barred assessment under the Maharashtra VAT Act, 2002 could not be relied upon to dispense with physical hearing while rejecting refund applications.
As per section 54 of the CGST Act and Rules 89 & 92 of the CGST Rules, HC explained that if an application for refund is to be rejected, the same can only be done after giving the applicant an opportunity of being heard.
The expression opportunity of being heard is not an expression of empty formality. It is a part of the well-recognized principle of audi alteram partem which forms the fulcrum of natural justice and is central to fair procedure. The principle is that no one should be condemned unheard.
HC observed that though u/s 54(7), a time limit of 60 days is prescribed for making of an order allowing the claim of refund, that period of 60 days would commence from the date of receipt of the application complete in all respects without there being a corresponding provision for rejection of application not complete in all respects.
HC held that, when the law requires that no application for refund shall be rejected without giving an applicant an opportunity of being heard, the same cannot be substituted by telephonic conversations and exchange of emails.