Order Date: 09 February 2023

Parties: M/s. CJ DARCL LOGISTICS LIMITED vs. 1. Union of India represented through the Secretary, Ministry of Finance and three others

Facts – 

• The Petitioner, M/s. CJ DARCL LOGISTICS LIMITED obtained two GST registrations for RCM and FCM separately. He was regularly paying the GST liability under the forward charge mechanism for each tax period (viz. month).
• On account of a bonafide mistake, the petitioner deposited an amount of Rs.1,70,12,325/- in the electronic cash ledger of RCM registration instead of depositing it in the cash ledger of FCM registration. Later he again deposited the same amount in the electronic cash ledger of the FCM registration to file the GSTR-3B return. As there was a double payment and the amount was lying as an excess balance in the electronic cash ledger of the petitioner, an application for a refund in FORM GST RFD-01 was filed.
• The petitioner was proceeded against SCN and his application for a refund was rejected by the department without disclosing any reasons for the inadmissibility of a refund.
• Adjudicating authority proceeded to decide the SCN taking into account the illegality committed by the petitioner by obtaining two GSTIN numbers and benefit of ITC of Rs. 4,57,27,369/- in excess.

Issue 

• Whether the petitioner is eligible to get the refund or not?

Orders – 

• The Court observed that the SCN was of a different allegation, and only after submissions of the petitioner’s reply, the original order was passed which was never part and parcel of the original show cause notice. It is settled principle of law that if an allegation or ground is not made at the time of issuance of show cause notice, the authority cannot go beyond the scope of show cause notice to create new ground at the later stage of adjudication. 
• It further transpires that the impugned proceedings are also vitiated for violation of principles of natural justice as neither a proper show cause notice has been issued nor any opportunity of hearing was given to the petitioner. It is also now well settled that before adjudicating any issue which is against the interest of assessee; opportunity of hearing should be granted to him.
• The Court stated that the impugned SCN and the consequent order are quashed and set aside and the appeal is allowed. However, the revenue is at liberty to issue a fresh show cause notice and proceed in accordance with law.