Bombay HC Sets Aside GST Refund Rejection Orders for Non-Compliance with Rule 92(3) CGST Rules, 2017
Case Overview
Case Name: Haren Textiles Private Limited Vs Deputy Commissioner of State Tax
Court: Bombay High Court
Subject Matter: GST Refund Rejection | Procedural Compliance | Show Cause Notice Requirement
Background of the Dispute
Haren Textiles Private Limited, the petitioner, had submitted refund applications before the concerned state tax authorities. Upon processing these applications, the respondent authorities passed a set of orders — some portions of which sanctioned refunds for certain periods while other portions rejected refund claims for remaining periods. These orders were collectively exhibited as Exhibit-C (pages 129 to 190) and Exhibit-D (pages 191 to 283) on record.
Aggrieved by the portions of those orders that denied the refund claims, the petitioner approached the Bombay High Court by way of this writ petition. The core grievance raised was a procedural one — that the authorities had failed to comply with the mandatory requirements laid down under Rule 92(3) of the Central Goods and Services Tax (CGST) Rules, 2017 before proceeding to reject the refund claims.
The Statutory Framework: Rule 92(3) of the CGST Rules, 2017
At the heart of this matter lies Rule 92(3) of the CGST Rules, 2017, which prescribes a detailed procedure that the proper officer must follow before rejecting any refund claim. The provision reads as follows:
"92. Order sanctioning refund:-
(3) Where the proper officer is satisfied, for reasons to be recorded in writing, that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in Form GST RFD-08 to the applicant, requiring him to furnish a reply in Form GST RFD-09 within a period of fifteen days of the receipt of such notice and after considering the reply, make an order in Form GST RFD-06, sanctioning the amount of refund in whole or part, or rejecting the said refund claim and the said order shall be made available to the applicant electronically and the provision of sub-rule (1) shall, mutatis mutandis, apply to the extent refund is allowed:
Provided that no application for refund shall be rejected without giving the applicant a reasonable opportunity of being heard."
Key Procedural Obligations Under Rule 92(3)
The above provision imposes a structured, multi-step procedural obligation on the proper officer, which can be broken down as follows:
Recording of Reasons in Writing: Before initiating rejection proceedings, the proper officer must record in writing the reasons for concluding that the refund is wholly or partly inadmissible or not payable.
Issuance of Show Cause Notice in Form GST RFD-08: The proper officer is mandatorily required to issue a formal notice in the prescribed Form GST RFD-08 to the assessee, putting them on notice about the proposed rejection.
Opportunity to File Reply in Form GST RFD-09: The assessee must be given a period of fifteen days from the date of receipt of the notice to furnish a reply in Form GST RFD-09.