These three appeals have been filed under Section 107 of the Central Goods and Service Tax Act, 2017 by M/s State Bank of India, Tilak Marg, C-Scheme, Local Head Office, Jaipur-302005 (hereinafter also referred to as “the appellant”) against the Orders-in-Original (hereinafter as “the impugned orders”) passed by the Assistant Commissioner, Central Goods & Service Tax Division-H, Jaipur (hereinafter called as the “adjudicating authority”) as mentioned below. As common issue is involved in all these three appeals therefore, I take up the same for decision simultaneously:

2.  BRIEF FACTS OF THE CASE:

2.1  The appellant having GSTIN No.08AAACS8577KIZP is engaged in providing various financial services in India under the category of Banking and Financial Services. Amongst various other services, the Appellant provides banking services to Importer/Exporters.

2.2  The appellant has filed refund claim under Section 54 of CGST Act,2017 for refund under any other category. On scrutiny of refund claim filed by the appellant, the adjudicating authority has found following deficiencies and issued the Show Cause Notices in FORM GST-RFD-08 vide F. No. V(18)Div-H/Ref/SBI/24/2019/2865 dated 14.10.2019 proposing for rejection of refund claim that :

(1) The claimant has not submitted the final outcome of the referred SCN whether the issue has been finally decided in favour of the assessee or not. Further, the claimant has submitted that as per Section 17(4) of CGST Act, 2017 they have availed the Input Tax Credit of 50% of IGST paid under reverse charge. Since, they do not accept the liability to pay IGST under reverse charge. They have filed refund for balance 50% of IGST paid under RCM. However, the assessee has not fulfilled the conditions for non apply of 50% restrictions as the assessee has paid Tax under RCM and claimed ITC.

2.3  The adjudicating authority vide Orders in Original all dated 07.11.2019 has rejected the refund claims for the period and amount mentioned at above in Para-I in column No.(4) and (5) filed by the appellant stating that on scrutiny of refund claim, it was observed that the claimant has not submitted the final outcome of the referred SCN whether the issue has been finally decided in favour of the assesseee or not. Further, claimant has submitted that as per Section 17(4) of the CGST Act, 2017, they have availed the input tax credit of 50% IGST paid under reverse charge. Since, they do not accept the liability to pay IGST under reverse charge, they have filed refund application under Section 54 of CGST Act, 2017 for balance of 50% IGST paid under reverse charge. The relevant provisions of Section 17 of the CGST Act, 2017 is as under:

(1)…..

(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies.

(3)…..

(4) A banking company or a financial institution including a non-banking financial company, engaged  in supplying services by way of accepting deposits, extending loans or advances shall have the option to either company with the provisions of sub-section (2), or avail of, every month, an amount equal to Fifty per cent of the eligible input tax credit on Inputs, capital goods and input services in that month and the rest shall lapse;

Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year ;

Provided further that the restriction of fifty per cent. shall not apply to the tax paid on supplies made by one registered person to another registered person having the same Permanent Account Number.

2.4 In view of the above provisions and relevant documents submitted by the appellant, it appeared that the appellant has availed second option and availed 50% ITC and remaining claimed as refund but as per above provisions, remaining shall lapse. Therefore, it appeared that the appellant has not fulfilled the conditions for non-apply of 50% restriction as the appellant has paid tax under reverse charge and claimed ITC. Further, as per Notification No.13/2017-CT(Rates) and 10/2017-IT(Rates) both dated 28.06.2017 – Any service supplied by any person who is located in a non taxable territory to any person located in taxable territory (other than non taxable on line recipient) the whole of tax leviable shall be paid by the recipient of service on reverse charge basis. Therefore, on the services provided by the Foreign Bank Tax is payable by recipient of service (i.e. SBI).

2.5 The refund claim filed by the appellant is not covered by any of the refund category mentioned in Section 54 and claimed under any other category. There is no specific provision for refund of the tax paid under RCM by the assessee under protest till the issue is finalized.

2.6 The claimant in response to SCN, vide letter dated 22.10.2019 has sought time of 15 days to submit reply, but no response was received, therefore, claims found inadmissible.

3. Being aggrieved with the impugned orders all dated 07.11.2019, the appellant has filed the appeals on the following grounds which are summarized as under:-

• that the impugned order has been passed ex-parte and not sustainable.
• that adjudicating authority vide letter dated 14^th October 2019 which was received on 16th October 2019, has granted personal hearing on 18^th October 2019. Since the GST matters are handled centrally from Corporate Centre Mumbai, it was not possible to arrange for personal hearing at such short notice. Accordingly, the appellant requested to grant next hearing date on 31^st October 2019. However, the adjudicating authority has passed the ex-parte order without granting any opportunity of hearing and rejected the refund.
• that proviso to Rule 92(3) of CGST Rules, 2017 provides that refund application shall not be rejected without opportunity of hearing. Relevant extract of rule is reproduced as under:

Provided that no application for refund shall be rejected without giving the applicant an opportunity of being heard.

• that it is clear from the above that GST Law provides for providing opportunity of hearing to the applicant and refund application can not be rejected without granting hearing.
• that it is settled legal position that any order which is against the assessee can not be passed without granting opportunity of hearing. Thus, the impugned order is against the principle of natural justice and not sustainable.
• that without prejudice to the above, the appellant is not the recipient of the service provided by the Foreign Banks
• that the nexus between consideration (i.e. Foreign Bank Charges) and the foreign bank services are established between the Foreign banks and the exporter/importers.
• that foreign Banks and the Appellant are co-service providers to the exporter/importers.
• that URC 522 and UCP 600 are protocols and not agreements and exporters/importers are also party to it.
• that foreign bank charges not accounted in the Appellant’s book.
• that no value addition.
• that place of provision of Foreign Bank Services can not be determined as per Rule 3 of Place of Provision of Service Rules, 2012.
• that the Trade Notice No.20/13-14 dated 10.02.2014 issued by the Commissioner, Service Tax-I, Mumbai is legally invalid.

4. Personal Hearing in the case was held on 13.10.2020 through video conference, wherein, Shri Sanjay Khemani, Chartered Accountant and Sh.Krishna Kumar Sharma on 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 and requested to decide the case accordingly.

5.  I have carefully gone through the case records and submissions made in the appeal memorandum as well as oral submission at the time of personal hearing. I find that the adjudicating authority has rejected the refund claim on the ground that the appellant has not submitted the final outcome of the referred SCN whether the issue has been finally decided in favour of the assessee or not. That, on the services provided by the Foreign Bank, Tax is payable by recipient of service (i.e. SBI). The refund claims filed by the appellant is not covered by any of the refund category mentioned in Section 54 and claimed under any other category and there is no specific provision for refund of the tax paid under RCM.

6.  I find that the appellant bas mainly contested in their appeal memo that the adjudicating authority has passed the ex-parte order and had not granted any opportunity of hearing and rejected the refund claim filed by them. Further, they stated that the show cause notice dated 14.10.2019 for fixing the date of personal hearing in the matter fixed on 18.10.2019 was received on 16.10.2019, since the matters are being handled centrally from their Corporate Centre, Mumbai and not possible at a very short period of time to attend the hearing. In the meantime, the appellant vide their letter dated 22.10.2019 has requested for seeking time of 15 days to submit the reply to Show Cause Notice. But instead of giving some time and accepting the request of the appellant for seeking of time to submit the reply, the adjudicating authority has passed the Orders-in-Original rejecting the refund claims filed by the appellant. Thus, the appellant did not avail the opportunity of personal hearing and without considering his submission the adjudicating authority has passed the order.

7.  Further, as per first proviso to sub rule (3) of Rule 92 of CGST Rule,2017- 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 provisions 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 an opportunity of being heard.

8.  I find that the adjudicating authority while rejecting the refund claims of the appellant neither considered their first request for seeking 15 days time to submit reply to show cause notice nor granted any sufficient opportunity of time to attend the personal hearing despite their written request dated 22.10.2019. I also find that non-passing of speaking order indeed amount to denial of natural justice. Before passing of orders atleast their request for seeking 15 days time to submit their reply to show cause notice should have been considered and at least speaking order should have been passed by giving proper opportunity of personal hearing to the appellant and detailing factors leading to rejection of refund claims. Such order is not sustainable in the eyes of law and accordingly set aside. The appellant is directed to submit all relevant documents to the adjudicating authority and the claims will be processed by the adjudicating authority as per the provisions and procedure as prescribed under CGST Act, 2017 and CGST Rules as stated above.

9.  Accordingly, the appeals are disposed off in the above manner