Order Date – 17 April 2023

Parties: M/s. Knowledge Capital Services Private Limited Vs Union Of India, State of Maharashtra, Assistant Commissioner of State Tax,

Facts – 

• The petitioner, M/s. Knowledge Capital Services Private Limited is engaged in the business of providing information technology-enabled services and is granted a valid registration certificate. The Petitioner had exported its services under a Letter of Undertaking without payment of integrated tax in terms of section 16 (3) of the Integrated Goods and Services Tax (IGST) Act, 2017, which also permits to claim of refund of the unutilised input tax credit on supply of goods or services or both without payment of integrated tax.
• Accordingly, the Petitioner claimed a refund of accumulated Input Tax Credit (ITC) on account of the export of services from April 2020 to March 2021
• A show cause notice was issued to the Petitioner on 8 July 2022, proposing to reject the refund claim for the reason alleged in the defect sheet.

Issue - 

• Whether the petitioners entitled to refund of accumulated Input Tax Credit?

Order – 

• The Single Bench of Hon’ble High Court observed that no deficiency was pointed out; neither deficiency memo, as contemplated under Rule 90 (3) of the CGST Rules of 2017 in Form GST RFD-03, was issued to the Petitioner. The Petitioner directly received Form GST RFD-08 under Rule 92 (3) of the CGST Rules of 2017 for rejection of the application for refund. There were no reasons given in the said Form GST RFD-08, and it was stated that the Exports Defects Memo Knowledge Capital-pdf.pdf is a file that is attached.
• Since it is an admitted position that no hearing was given to the Petitioner before the rejection of the refund application contrary to the proviso to Rule 92(3) of the Rules, the impugned order needs to be set aside on this ground as well.
• Therefore, the methodology adopted by the Respondents in rejecting the application of the Petitioner for a refund is completely contrary to the scheme of the CGST Rules of 2017. The Petitioner was not given an opportunity to clear deficiencies, and the Petitioner was not given an opportunity of hearing before rejecting the refund application; the impugned order, therefore, cannot be sustained.
• Accordingly, the impugned order is quashed and set aside. The application of the Petitioner made under Form-GSTRFD- 01 is restored to file. Thereafter, Respondent No.3 will process the application as per the procedure referred to above. If there are deficiencies in the Petitioner's application, the same may be informed to the Petitioner as per Form-GST-RFD-03, and if not, the application be processed as per law.
• The Writ petition is allowed.