1. The petitioners herein seeks the invocation of the writ jurisdiction for quashing the show cause notices dated 04.03.2020 and 11.03.2020 on the ground that they have been issued without assignment of any reasons for proposing the rejection of the claim of the petitioners of refund. The petitioners also challenged the orders dated 23.03.2020 passed without availing any opportunity of personal hearing to the petitioners and passed without assigning any reasons.

2. The prayers sought for are as follows: –

“(a) That this Hon’ble Court be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records in the present case, and after going into the question of legality, quash and set aside the impugned notices and impugned orders issued to the petitioner no.1;

(b) That this Hon’ble Court be pleased to issue writ of mandamus or any other writ or order or direction under Article 226 of the Constitution of India directing the respondent to dispose of and sanction its refund claims dated 03.02.2020 in accordance with law;

(c) For costs of the petition be provided for;

AND

(d) for such further and other reliefs, as this Hon’ble Court may deem fit and proper in the nature and circumstances of the case may require.”

3. The petitioner is an integrated steel manufacturer with a manufacturing facility comprising of pellet making, iron making, steel making etc. The finished goods manufactured by the petitioner no.1 are exported as also cleared to the Special Economic Zone (SEZ) and such supplies are reckoned as ‘Zero Rated’ supply in terms of Section 16 of the Integrated Goods and Service Tax (IGST) Act. The supply is also entitled to avail the ITC in respect of the goods and services used for making Zero Rated supplies even when they are exempted.

3.1. The two separate applications came to be filed by the petitioners during the period from July, 2019 to September, 2019, both dated 03.02.2020 for refund of unutilized compensation cess under Section 54 of the CGST Act read with Section 16 of the IGST Act read with Rule 89 of the CGST Rules accompanied by the requisite documents.

3.2. Pursuant to the filing of these applications on 03.02.2020, the two separate acknowledgments were received by the appellant from the Assistant Commissioner, Division-4, Surat. The petitioners have received two notices dated 11.03.2020 and 04.03.2020 under Rule 92(3) of the CGST Rules sought to reject the applications for refund. Both the show cause notices stated that the petitioners’ refund applications were liable to be rejected on the ground that rejection as per the said show cause notices was “other”. It was also asked to furnish the reply within 15 days.

3.3. Since the show cause notices did not specify the reasons for proposing to reject the refund application, for they themselves being unclear and vague, no opportunity was made available to the petitioner no.1. The petitioner had replied to the same on 13.03.2020 and various contentions had been raised.

3.4. Once the orders of rejection came on 23.03.2020, without availing any opportunity of personal hearing, no reasons were assigned according to the petitioner in the impugned order for rejection, therefore the petitioner is before this Court with the above mentioned prayers.

4. On issuance of notice, respondent has appeared and filed the affidavit-in-reply through Mr. R.S.Tiwari, Joint Commissioner (In-situ), Division-IV, CGST and Central Excise, Surat, where all aspects in relation to the making of the application for refund of unutilized compensation cess amounting to ₹ 9,53,26,364/- and ₹ 4,57,285/- for the supply made to the SEZ under Section 54, has been accepted.

4.1. According to the respondent, the refund claim had been processed and since it did not include the value of the steel supply in the total adjusted turnover, two notices dated 11.03.2020 and 04.03.2020 were issued under Rule 92(3) of the CGST Rules seeking rejection of application of refund and requesting tax payer to attend the personal hearing on 16.03.2020. The petitioner, in absence of any reasons for rejection, conveyed them that it was not possible to reply to the show cause notice or to appear for the personal hearing and the refund claim had been rejected on 23.03.2020. He has taken a plea of the alternative remedy available under the statute instead of invoking the writ jurisdiction.

4.2. He has also relied on the decision of the Apex Court in case of Assistant Collector of Central Excise, Chandan Nagar vs. M/s. Dunlop India Limited and Others [Civil Appeal No. 4742-43 of 1984] to say that Article 226 of the Constitution is not meant for short circuiting or circumventing the statutory procedure. It is only where statutory remedies are entirely illsuited to meet the demand of extraordinary situation or where the vires of the statute is in question or where private or public wrongs are inextricably mixed up and the prevention of public injury and the vindication of public justice requires to take recourse of Article 226, the writ petition can be entertained.

4.3. The grievance is made that the petitioner, instead of filing an appeal before the Joint Commissioner, had approached the Court straight. He has denied of there being absence of the reasons. It is further his say that it is prematured to claim that the refund is being rejected in as much as speaking order has been passed in this regard and it is provided on the on-line portal. The petitioner also had been availed the opportunity to put up the defence for such a refund claim and the opportunity of personal hearing also had been granted which he chose not to avail.

5. The rejoinder affidavit is filed by the petitioner reiterating its version in the petition.

6. We have heard learned advocates on both the sides extensively and also perused the material on record.

7. It is to be noticed that the petitioners preferred the refund claims. It emerges that the petitioner no.1 preferred refund claim of unutilized compensation cess for the period from July, 2019 to September, 2019 on account of the export and supply of goods to the SEZ and such refund applications were made on 03.02.2020. It is not disputed that the same had been received by the Assistant Commissioner, Division-4, Surat. The acknowledgment also had been received on 19.02.2020 of the receipt of such refund applications.

7.1. Soon thereafter, two notices came to be issued dated 11.03.2020 and 04.03.2020 under Rule 92(3) of the CGST Rules which are in the form of show cause notices. They state that the petitioners’ refund applications are liable to be rejected and the ground for rejection as per these show cause notices was “other”. The petitioner was called upon to show cause as to why the refund claim should not be rejected for the reasons stated in these show cause notices and it was also required to furnish the reply of the notices within 15 days from the date of service of notices. The personal hearing also was afforded on 16.03.2020.

7.2. As rightly pointed out by the petitioners, the only ground assigned for proposing the rejection of the claim for refund is the “others” with a remark that “error in adjusted total turnover.” It is surely and rightly has been termed as a show cause notice which is completely vague and lacks the fundamental details which otherwise is required to be given for anyone to comprehend the same. A notice since is a foundation of any proceedings and if the same is not clear and is vague, the very edifice is extremely weak and based on such hollow foundation, when an attempt is made to raise a superstructure, the same cannot be sustained.

7.3. In the affidavit-in-reply filed by the senior officer, he was unable to defend the show cause notice which is not capable of any kind of defence. Availing of any opportunity in terms of filing of the reply or of personal hearing also would not serve any purpose when the very show cause notice has no foundational facts contained in it. The respondents has issued the said notice for the purpose of rejecting the refund claim. The reply to the show cause notices given by the petitioners also clearly and emphatically pointed out to the authority that the show cause notices given are wholly and essentially lack any reason since it simply mentions the reason as “other” without elaborating or specifying the grounds on which the proposal to reject the refund the amount is made. The column of remark as mentioned refers only as “error in adjusted total turnover.” Not only the petitioner but anyone would be clueless as to what error the officer is attempting to point out. Hence, the request was rightly made to furnish the details of error in adjusting turnover for verifying and filing the suitable reply.

7.4. Petitioner quite rightly further clarified that in absence of proper reasons in the show cause notices, neither it would be in a position to file any reply nor appear in person for hearing. This has been the reply to both the show cause notices. We can surely appreciate that the replies shall naturally be of the grounds, factual as well as legal, as may be incorporated in the notice itself.

7.5. Instead of making any attempt to correct the error of giving the notice with reasons, the authority concerned / the respondent had chosen to pass the orders of rejection which are under challenge before this Court. The orders which have been passed on 23.03.2020 simply says “I hereby reject the amount of INR 0 to M/s. ARCELORMITTAL NIPPON STEEL INDIA LIMITED having GSTIN 24AAACE1741P1ZN under sub-section () of section ) of the Act/under section – of the Act.” The remark column says “Value of steel supply not included in the total adjusted turnover.”

7.6. Not only the show cause notice lacks the clarity and requisite material necessary to meet with the same, the order impugned is also in clear violation of the settled cannon of law. Lack of reasons in the show cause notices has not enabled the parties to make an effective representation and file the reply nor would the grant of personal hearing for contesting such show cause notices would sub-serve the purpose. The order of rejection also is a non-speaking order and the same had been passed without bearing in mind requirements of giving any reasons for rejection.

8. Needless to say that this is in clear breach of the settled principle of natural justice and the law laid down time and again by the Apex Court and this Court in case of Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and Others reported in 1998 (8) SCC 1, the entire proceedings initiated by the respondent in rejecting the refund claim since is in complete violation of the principles of natural justice and as also in clear breach of statutory requirement and can be termed as an arbitrary act on the part of the authority, the same deserves interference by quashing and setting aside the orders dated 23.03.2020 which are impugned in this petition.

8.1. While so doing, we have chosen not to enter into the merit of the refund claims and instead we relegate the consideration of the applications of the refund claim preferred on 03.02.2020 before the Deputy Commissioner. Let the same be processed after availing the opportunity of personal hearing to the petitioner within two (2) weeks from the receipt of copy of this order.

9. While parting, we deem it appropriate to direct this order to be placed before the senior most officer for him to recognize that there is a need for the in-house training for discharging the quasi-judicial functions. Unless, this aspect is taken seriously, it would entail the serious consequences and also results into consuming the time and energy of all concerned.

10. Though we were inclined to impose the cost in the circumstances discussed above, at the request of learned Senior Standing Counsel Mr. Priyank Lodha who has, on instructions, urged that the officer concerned is a fresher, we have resisted ourselves from so doing with the directions above.

11. Disposed of accordingly.