Can the refund claim be rejected if a few invoices have been uploaded in Annexure-A and the circular mentions the name as Annexure-B? Is rejection of whole refund amount be valid due to discrepancy in few invoices?

PJ/Case Study/2020-21/156

27 June 2020

Case:
Shri Roopa Ram Suthar, Proprietor of M/s SHREE K.R. ENGINEERING WORKS (OIA No. 67(DSD)CGST/JDR/2020 dated 18.06.2020.

Introduction:

M/s Shree K R Engineering Works are having GSTIN 08ACPPS3725F1ZA. They have claimed refund of accumulated input tax credit amounting to Rs. 2,76,883/- for the month of July, 2018.

Issue involved:
Can the refund claim be rejected if a few invoices have been uploaded in Annexure-A and the circular mentions the name as Annexure-B? Is rejection of whole refund amount be valid due to discrepancy in few invoices?

Brief Facts:
M/s Shree K R Engineering Works are having GSTIN 08ACPPS3725F1ZA. They have claimed refund of accumulated input tax credit amounting to Rs. 2,76,883/- for the month of July, 2018. A show cause notice was issued to the appellant alleging that the refund claim filed by them is not admissible under the provisions of section 54 of the CGST Act, 2017 as they have not filed statement of invoices in Annexure-B as required by the clarification issued vide Circular no. 125/44/2019 dated 18.11.2019. Reply to show cause notice was submitted wherein statement of invoices were marked as Annexure-A and the only difference was that the circular mentions the name as Annexure-B. Impugned order in original was passed on the grounds that certain invoices mentioned in the Annexure-B were not reflected in GSTR-2A and also the copies of invoices were not enclosed.

Applicant’s Contention:
The assesse has contended in the following manner

The impugned order in original rejecting the refund claim filed by them is wholly and totally erroneous and is liable to be set aside.
The appellant submit that the present refund claim has been rejected on procedural grounds without even providing an opportunity to the appellant to rectify or resolve the discrepancies found by the adjudicating authority. The appellant was issued show cause notice simply on the grounds that the statement of invoices as prescribed in Annexure-B was not submitted. However, in reality, they had submitted the statement of invoices but marked it as Annexure-A but inspite of the clerical error, they once again uploaded the statement of invoices in Annexure-B as required by the refund sanctioning authority. However, to their surprise, their entire refund claim has been rejected on altogether different grounds that certain invoices at serial no. 4, 9, 14, 19 & 23 of Annexure-B were not reflected in GSTR-2A and physical invoices were also not enclosed with the refund claim. The appellant submits that the impugned order has rejected their refund claim by going beyond the allegations of the impugned show cause notice which is not at all permissible in law. The appellant submits that the order cannot be passed on the grounds that were not alleged in the impugned show cause notice. In this respect, they wish to place reliance on the following judicial pronouncements:-

JAY AR ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS (SEA), CHENNAI [2007 (210) E.L.T. 459 (Tri. -Chennai)]. The verdicts of hon’ble Chennai Tribunal are produced as follows:-

“Order beyond show cause notice not sustainable - DEPB credit -Denial of - Show cause notice not proposed the denial hence, direction for debit of DEPB credit is beyond the scope of show cause notice, hence, not sustainable.”
The analysis of above decision makes it clear that where the order is passed on the grounds other than what are proposed in the show cause notice, it is not legally viable. Similar decision was given in the following cases:-

BHAGWATI SILK MILLS VERSUS COMMISSIONER OF CENTRAL EXCISE, SURAT [2006 (205) E.L.T. 182 (Tri. - MUMBAI)]

M/S OSWAL PAPER & ALLIED INDUSTRIES VS CCE, JALANDHAR [2010-TIOL-678-CESTAT-DEL]
CALIBER POINT BUSINESS SOLUTIONS LTD VS CST, MUMBAI [2010-TIOL-554-CESTAT-MUM.]

In the above referred cases, it was held that the order should align with the allegations of the show cause notice. If the order is not passed in accordance with the grounds specified in the show cause notice, it is not tenable in the eyes of the law. It is submitted that the ratio of the above cited decisions is equally applicable in the present case as the impugned order in original has been passed beyond the provisions invoked in the show cause notice. When the allegation of non reflection of invoice in GSTR-2A and non-submission of physical copies of such invoices was not even mentioned in the show cause notice, the impugned order could not have rejected the entire refund claim on the said grounds. Hence, the appeal filed by the appellant should be allowed.

Without prejudice to the above submissions, the appellant submits that even if there was objection as regards non-reflection of invoices at serial no. 4, 9, 14, 19 & 23 of Annexure-B in the GSTR-2A, intimation should have been given to the appellant to furnish physical copies of the said invoices but this has not been done and rather, the entire refund claim has been rejected on the basis of this discrepancy. The appellant submits that if there was objection as regards the above mentioned invoices, refund claim to the extent of said invoices should have been rejected and the balance refund claim should have been sanctioned. However, this has not been done and on the contrary, the entire refund claim has been rejected on account of procedural irregularity which is not at all justifiable.
The appellant submits that the invoices at serial no. 4, 9, 14, 19 & 23 of Annexure-B are being reflected in their GSTR-2A. The appellant submits that as they have already rectified the discrepancy pointed out, the refund claim should be sanctioned to them and the appeal should be allowed as substantial benefit of refund cannot be denied for procedural lapses.

In light of the above mentioned submissions, the refund claim filed by the appellant should be sanctioned to them at the earliest possible and the appeal should be allowed.

Decision:
The appeal was passed in favour of the Appellant.

Conclusion:
The appeal was passed stating that the whole refund claim should not have been rejected by the adjudicating authority without discussing the case on merits. Doing so the authority has defeated the principle of Natural Justice. Further the clerical error made by the appellant of mentioning the invoices in Annexure-A which is Annexure –B as per the circular shall not be a ground for rejection of refund. Moreover, this error was rectified and the copies of invoices was also attached but yet were not considered by the adjudicating authority which is wrong.

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PJ/Case Study/2020-21/156
27 June 2020

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