The Patna High Court recently annulled decisions made by the Goods and Services Tax (GST) Adjudicating and Appellate Authorities. This action was taken due to the authorities’ oversight in not adequately considering the evidence presented by the appellant to support their claim.
Binay Rice Mill, operating under the name Sharda Ram Industries and led by its proprietor, Binay Kumar Singh, has initiated legal proceedings in the Patna High Court.
The company is contesting the rejection of its refund application concerning taxes that were paid on capital goods acquired through the Export Promotion Capital Goods (EPCG) Scheme. This challenge highlights issues related to tax refunds associated with export-related investments.
Under invoices dated 01 September 2022 and subsequent dates, the applicant imported capital goods. The applicant, on 8 May 2023, has submitted an application for a refund of tax filed on these capital goods under the EPCG scheme as per Section 54(1) of the GST Act and applicable rules and circulars.
The Joint Commissioner of State Tax, Bhagalpur Circle-1, has rejected the refund application applied for by the applicant via an order dated 27 July 2023 on the grounds that the petitioner had not complied with the show cause notice dated 16.06.2023. But the same order has been passed via the adjudicating authority without dealing with the response submitted by the applicant dated 28 June 2023.
After that, the applicant appealed the order before the Additional Commissioner of State Tax (Appeal), Bhagalpur Division, who dismissed the case dated 21 May 2024. As the GST Tribunal was not applicable, the applicant invoked the writ jurisdiction of the High Court.
The representatives of the applicant, D.V. Pathy, Sadashiv Tiwari, Prachi Pallavi, and Hiresh Karan, said that the adjudicating authority had not been able to pass a reasoned and speaking order and is not able to consider the response submitted by the applicant, along with their reliance on distinct circulars issued via the Central Board of Indirect Taxes and Customs.
The applicant does not get the right to appeal from the same omission.
Vivek Prasad, Sanjay Kumar AC, and Roona AC represented the respondent state and GST authorities, who mentioned that they were not able to inform the court whether the order of the adjudicating authority on 27.07.2023 aligned with the show cause Notice (SCN) and the reasons allocated, and whether it had taken into account the response of the applicant.
The counsel of the respondent asked to keep the action of the order of the adjudicating authority in the guise of a decision of the appellate authority.
The Division Bench of Justice P. B. Bajanthri and Justice S. B. Pd. Singh cited that the adjudicating authority is liable to consider the reply and supporting documents placed before it and to deliver clear reasons as to why such submissions made by the appellant before it were accepted or rejected.
As per the court, the order on 27 July 2023 was devoid of consideration of the response issued by the applicant and hence suffered from a breach of principles of natural justice.
Read Also: Patna HC Quashes Tax Demand, SCN U/S 74 Invalid as GST Returns Were Filed
The Court referred to the Apex Court decision in Oryx Fisheries Pvt. Ltd. v. Union of India (2010), where it was held that “Insistence on reason is a requirement for both judicial accountability and transparency”.
The Patna High Court emphasised that quasi-judicial authorities must provide reasoned and articulate orders. It stated that the adjudicating authority is required to explain whether the circulars presented by the petitioner apply to their case.
As per that, the Patna High Court ruled that the orders of both the adjudicating authority and the appellate authority were non-sustainable, moving to quash the impugned orders, remanding the case back to the adjudicating authority.
It then directed that the case may be decided afresh after considering the response of the applicant on 28 June 2023, and may
Based on the response of the applicant, the case is to be reconsidered on June 28, 2023, as well as any additional replies submitted within 3 weeks. A reasoned decision is to be issued within four months.
| Case Title | Binay Rice Mill vs. State of Bihar |
| Case No. | Case No.15601 of 2024 |
| For the Petitioner | Mr D.V.Pathy, Mr Sadashiv Tiwari, Ms Prachi Pallavi, Mr Hiresh Karan |
| Respondent by | Mr. Vivek Prasad |
| Patna High Court | Read Order |
