Rejection of refund claim by Asst. Commissioner tantamount to sitting in appeal over order passed by Add. Commissioner (A)

While hearing a writ petition involving the issue of judicial discipline amongst the lower authorities in the GST Department, the High Court of Bombay referred to the landmark decision of the Supreme Court in Union of India Vs. Kamlakshi Finance Corporation Ltd. and re-iterated the findings therein, that the Departmental authorities had to adhere to judicial discipline and give effect to orders passed by the higher Appellate Authorities, as such orders were binding on the lower authorities. 

A Division Bench of Justice G S Kulkarni and Justice Jitendra Jain observed that the lower authorities did not attempt to assail the order passed in favour of the Petitioner by the Additional Commissioner (Appeals), either by exercising power of review under Section 112(3) of the CGST Act or any other way.

The Bench relied on the judgment of this Court in Globus Petroadditions Pvt. Ltd. VS. Union of India wherein it was held that Assistant Commissioner was required to comply with the orders passed by the Commissioner of Appeals and the Assistant Commissioner could not have refused to comply with the orders passed by the Commissioner of Appeals.

The Petitioner-Assessee was represented by Mr. Prakash Shah, Senior Advocate, whereas the Respondent-Department was represented by Mr. Jitendra B. Mishra.

The Petitioner is engaged in providing Engineering Consulting services to its group entities located outside India. In the relevant period, the Petitioner provided consulting service to its group entities outside India and did not pay GST on such service.

Having exported services, the Petitioner was eligible for refund of Input Tax Credit (ITC) availed on the input goods and services utilised towards export of services. The Petitioner filed an application claiming the refund of ITC. A Show Cause Notice (SCN) came to be issued, proposing to reject the Petitioner’s refund claim on grounds of non-disclosure of invoice details. The Petitioner filed reply to the SCN.

However, an order came to be passed rejecting the Petitioner’s refund application. On appeal, the Appellate Commissioner examined the documents on record and held that the Petitioner was eligible for refund.

Pursuant to having secured a favourable order, the Petitioner filed refund claim. Regarding the same, an SCN came to be issued proposing to reject the refund claim, again on grounds of non-disclosure of invoice details of Foreign Inward Remittance Certificates (FIRC). In response to such SCN, the Petitioner claimed that the very same issue had been considered by the Appellate Authority and resolved in favour of the Petitioner.

The Petitioner’s contentions were rejected and an order came to be passed rejecting the Petitioner’s refund application.

On hearing the contentions of both the parties, the High Court observed that it was not open to the Assistant Commissioner to pass order rejecting the Petitioner’s refund claim, as the same would be tantamount to sitting in appeal over the order passed by the Additional Commissioner (Appeals).

The Assistant Commissioner could not have passed the impugned order, of the nature that came to be passed, and the Assistant Commissioner was certainly bound by the orders passed by the Additional Commissioner (Appeals).

In the absence of any stay to the orders passed by the Additional Commissioner (Appeals), the Assistant Commissioner was obligated to grant benefit of the orders of the Additional Commissioner (Appeals) to the Petitioner, the Bench surmised.

On this ground alone, the Bench observed that the order passed by the Assistant Commissioner, warranted being set aside, as it was prima facie illegal.

Cause Title: Jacobs Solutions India Pvt Ltd Vs Union of India [Writ Petition No.5808 of 2023 / 2023-Enterslice-14-HC-Bom-GST]

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