The Allahabad High Court has ruled that a substantive claim for a GST refund cannot be rejected merely due to a typographical error or the citation of a wrong provision in the application forms. Justice Ajay Bhanot set aside orders passed by the GST appellate authority that had denied a refund claim on technical grounds and remitted the matter for a fresh decision on its merits.
Case Background
The case, Bharat Mint & Aroma Chemicals v. Union Of India And 2 Others, concerned a writ petition filed after the petitioner’s application for a refund of excess Central Goods and Services Tax (CGST) was rejected. The appellate authority, in its order, acknowledged the petitioner’s eligibility for a refund of Rs. 12,84,595 but denied the claim.
The authority’s order stated: “the appellant is eligible for a refund of an amount of Rs. 12,84,595/- (CGST) on account of ‘Tax paid on intra-state supply later held to be inter-state supply and vice versa’ but they have filed RFD-01 under wrong head i.e. IGST head.” The authority further noted a failure “to adduce any evidence to buttress their claim” and concluded that in the “absence of concrete documentary proof,” the appellant was not eligible for the refund under Section 77(1) of the CGST Act, 2017.
Arguments of the Parties
Counsel for the petitioner, Shri Abhinav Mehrotra and Ms. Bhavna Mehrotra, argued that the excess tax amount was incorrectly recorded under the Integrated Tax (IGST) heading instead of the Central Tax (CGST) heading in Form GST RFD-01 due to a “software glitch” and not an incorrect entry by the petitioner. They contended that, regardless of the cause, it was a technical error and the petitioner should not have been non-suited without consideration of the merits of the claim.
Representing the respondents, Shri Parv Agarwal submitted that refund claims not filed in the proper format cannot be processed and therefore, there was no infirmity in the impugned order.
Court’s Analysis and Decision
Justice Ajay Bhanot, after hearing both parties, observed that the petitioner’s application had, in fact, made a claim for a refund of CGST, even though the amount was entered under an incorrect head in the refund form. The court deemed the cause of the error irrelevant.
The court held that the substantive rights of the petitioner could not be denied on the basis of a technicality. In a key observation, the judgment stated, “Citation of a wrong provision or typographical error in the forms submitted along with the application cannot be the basis for rejecting the substantive claims of the petitioner or denying rights accruing to the petitioner.”
The High Court found that the appellate authority had “erred in law” by neglecting to consider the application’s substance and instead declining the claim on a technicality.
Furthermore, the court addressed the second ground for rejection—that the petitioner had failed to “adduce any evidence.” The judgment found this reasoning to be “in excess of the show cause notice issued to the petitioner.” The court noted that the show-cause notice did not raise this specific infirmity, and therefore, an adverse finding was returned without affording the petitioner an opportunity of hearing. The court concluded, “The second finding has been passed in violation of principles of natural justice.”
In light of these findings, the court quashed the impugned orders dated 29.12.2023 and 03.12.2024. The matter was remitted to the appellate authority for a “fresh determination in light of the observations made in this order.” The writ petition was allowed to that extent.
