This appeal has been filed under Section 107 of the Central Goods and Service Tax Act, 2017 by M/s Honda Motorcycle and Scooter India Private Limited, SPL-02(D), 2(E), 2(F) & 2(G) Tapukara Industrial Area, District-Alwar, Khushkhera, Rajasthan-301707 (hereinafter also referred to as “the appellant”) against the Order-in-Original No. RFD-06/BHD-C/029/2018-19/GST(Refund) dated 21.08.2019 (hereinafter referred to as “the impugned order”) passed by the Assistant Commissioner, Central Goods & Service Tax Division-D, Bhiwadi-II (hereinafter called to as “the adjudicating authority”).

2.  BRIEF FACTS OF THE CASE:

2.1  The appellant having GSTIN No.08AAACH7467DIZK engaged in manufacture of two wheelers falling under HSN No.87112029 have filed refund claim of ₹ 78,54,790/-   on 27.02.2019 under Section 54(1) of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017 on the grounds that “The applicable rate of GST in the respective period was 5% but vendor charged 18%. Therefore, GST refund is claimed for the excess GST (13%) paid on canteen services to vendors” during the period November-2017 to July-2018.

2.2  On scrutiny of refund claim filed by the appellant the adjudicating authority observed that the appellant has filed the refund claim for the excess amount of GST charged from them by their service providers namely M/s Caterman Cuisine Concepts P Ltd., Opp-Honda Plant, Main Road, Tapukra, Bhiwadi (GSTIN 08AAFCC2560DIZO) and M/s ICS Foods P Ltd., RHB, Bhiwadi (GSTIN 08AABC18290GIZD) on Canteen Services which appeared to be not admissible to the appellant.

2.3  Accordingly, the adjudicating authority issued a Show Cause Notice dated 18.03.2019 to the appellant proposing therein rejection of refund of Rs.  78,54,790/- Further, after taking into consideration their submission, the adjudicating authority has rejected the refund claim as confirmed vide FORM-GST-RFD-06 dated 21.08.2019.

3.  Being aggrieved with the impugned order dated 21.08.2019, the appellant has filed the appeal on the following grounds which are summarized as under:-

• that the SCN issued in Form GST RFD-08 proposed to reject the refund claim on the premise that the Appellant is not entitled to refund under Section 54 of the CGST Act. Thus, the SCN was vague and did not contain any specific allegations.
• that it duly assailed issuance of such SCN not containing allegations. However, the Impugned Order has conveniently ignored the entire  submissions and passed an order on a completely new premise with a predetermined mind rendering the Impugned Order to be ex-facie wrong and perverse for reason stated hereunder.
• that Section 54 of the CGST Act is a provision for refund of tax under GST regime and deals with all kinds of refund arising out under the CST Law viz. refund on account of inverted duty structure. refund of inward supply of goods or services or both to specialized agencies like United Nations, excess tax paid etc.
• that it is pertinent to note that the conditions and requirements for claiming of refund under each category prescribed under Section 54 is different from the other category. At the cost of repetition, the Appellant submits that the SCN issued in the present instance proposes to deny the refund claim on the sole premise that the Appellant is not entitled to any refund in terms of Section 54 of the CGST Act. Notably the allegation is general in nature and does not cite specific violations or reasons in the Appellant’s case to deny the refund, thereby denying the right of the Appellant to cater to the specific allegations or proposals for rejecting the refund claim. Accordingly, the SCN is vague and lacks merit and therefore the same is in clear dereliction of the principles of natural justice.
• that it is submitted that the requirement to issue a show cause notice, objectively specifying the reasons for denial of refund, forms a fundamental requirement. Its non-issuance or mere general allegations severely handicaps the assessee from forming and submitting its reply to the objections basis which refund is sought to be denied. Thus, non-declaration of specific allegations under a show cause notice shuns assessee’s right of representation of its claim.
• that the Appellant further submits that the object of notice is to give an opportunity to the person concerned, to present his case. Natural justice requires that the person directly affected by the proposed acts, decisions or proceedings be given adequate notice of what is proposed, so that he may be in a position to make representation on his own behalf, or to appear at the hearing or inquiry (if any), and effectively represent his own case and answer the case he has to meet.
• that it is further necessary to observe that show cause notice is not merely an empty formality. The Appellant submits that the opportunity to show cause has to be real and substantive which means the person concerned must know as to why the adjudicating authority is proposing that the taxpayer is not entitled to refund claim and the same is not covered within the sweep of the CGST Act. It is always expected on the part of the adjudicating authority to disclose material facts and particulars in support of the allegations made in the show cause notice so as to enable the Appellant to meet the case sought to be made out against him
• that the Appellant further submits that when an obligation is cast upon the authority to give notice to show cause before reaching the final conclusion against the person affected by its action, then the purpose and requirement to issue show cause notice is two-fold (i) the assessee must get an opportunity to meet the case against him; and (ii) he must have an opportunity to set forth his own case to show as to why an adverse order should not be passed against him.
• that it is needless to state that the conclusions of the authority at the stage of giving a show cause notice are always prima facie or tentative conclusions for if it is not so, its ultimate order would suffer from bias, i.e. its predetermined mind. However, because its conclusions at the stage of show cause notice are only prima facie or tentative conclusions, it would not mean that they are not required to be disclosed in the show cause notice.
• that further, if in the exercise of a power, any legal right of a person is affected, then in such cases, the person affected may certainly have an interest or expectation to know the authority, jurisdiction and power coupled with ground on which his right is being denied. The duty to act judicially is implicit in the exercise of a power to decide and determine to the prejudice of a person, it is hard to exhaustively enumerate the situations in which such a duty will arise according to natural justice. It has, however, been upheld in various judicial precedents that a duty to act judicially will arise in the exercise of a power to deprive a person of legitimate interest or expectation

Further, the appellant has relied upon the following case law in their defence:-

Dharampal Satyapal Limited V. DCCE, 2015 (320) ELT 3 (SC).

Cooper V. Wandsworth Board of Works, (1863J 14C B.N.S. 180.

Rajasthan Spinning and Weaving Mills V. CCE, 1999 (112) ELT 457 (Tri.)

Rajmal Lakhichand V. CC, 2010 (255) ELT 357 (Bom.)

CCE V. Brindavan Beverages (P) Limited, 2007 (213) ELT 487 (SC)

Tata Engineering & Locomotive Company Limited V. CCE, 2006 (203) ELT 360 (SC)

4.  Personal Hearing in the case was held on 21.08.2020 at 1230 Hrs through video conference, wherein, Shri Puneet Bansal, Advocate or behalf of the appellant, appeared for personal hearing through video conference and explained the case in detail and reiterated the submission already made in the grounds of appeal. He has stated that he will submit the additional submissions through mail and further requested that case may be decided according to their submission.

5.  I have carefully gone through the case records and submission made by the appellant in the appeal memorandum. I find that the adjudicating authority has rejected the refund claim amounting to ₹ 78,54,790/- on the ground that GST was paid by the Service Provider namely M/s Caterman Cuisine Concepts P Ltd., Tapukra, Bhiwadi and M/s ICS Foods P Ltd., RHB, Bhiwadi and the appellant M/s Honda Motorcycle and Scooter India Private Limited as service receiver has not deposited the tax.

6.  The issue involved in the present case is that whether the appellant i.e. M/s Honda Motorcycle and Scooter India Private Limited, Bhiwadi is eligible for refund or not as per the provisions of Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017.

7.  Section 54 of the CCST Act, 2017 reads as under:-

(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed:

Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed.

(2)  A specialized agency of the United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received.

(3)  Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilized input tax credit at the end of any tax period

Provided that no refund of unutilized input tax credit shall be allowed in cases other than –

(i)  zero rated supplies made without payment of tax;

(ii)  where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council :

Provided further that no refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty :

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

(4) The application shall be accompanied by –

(a)  such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and

(b)  such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person :

Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person.

(5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in section 57.

Rule 89 of the CGST Rules, 2017 also provides that (1) Any person, except the persons covered under notification issued under section 55, claiming refund of any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid on goods exported out of India, may file an application electronically in FORM GST RFD-01* through the common portal, either directly or through a Facilitation Centre notified by the Commissioner :

8.  I find that as per Section 54(1) of the Central Goods and Service Tax Act, 2017 and as per Rule 89(1) of the Central Goods and Service Tax, 2017 for making a refund claim a person should first have to pay/deposit the tax with the government which is clear from the word “any person . . paid by him” means that any person who has paid the tax. In the instant case the GST has been deposited to the Govt. account by the Service Providers namely M/s Caterman Cuisine Concepts P Ltd., Tapukra, Bhiwadi and M/s ICS Foods P Ltd., RHB, Bhiwadi for the period November-2017 to July-2018 and not deposited by the appellant i.e. M/s Honda Motorcycle and Scooter India Private Limited, Tapukara Industrial Area, District-Alwar.

9.  Section 54 of the CGST Act, 2017 does not provide any option for claiming refund i.e. either by supplier or receiver rather it is mandatory that only the person who has paid the tax to the Govt. account can file the refund claim. Wherever any option is provided it has been clearly mentioned in the provisions, such as in case of refund of tax paid on supplies as regarded deemed export, the third proviso to rule 89 (1) of the CGST Rules, 2017 provides that application may be filed either by the recipient or the supplier of deemed export supply. But no such provision exists in the Section 54 (1) of the CGST Act, 2017 in case of normal supply of goods or services. It is an admitted fact on record that in the instant case the tax has not been paid by the appellant to the Govt. account. Therefore, they are not eligible to file the refund claim. The case law cited by the appellant in their defence is squarely not applicable in this case.

10.  Keeping in view of the above discussions and findings and as per above legal provisions, the appellant is not eligible to file refund claim. I do not find any infirmity in the impugned order passed by the adjudicating authority and accordingly, the appeal filed by the appellant is hereby rejected