Defective Show Cause Notice is itself bad in law.

Case Title: TTEC India Customer Solutions (P.) Ltd. v. Deputy Commissioner of Sales Tax

Court: High Court of Gujarat

Petition No.: R/Special Civil Application No. 18270 of 2021

Category of Dispute: Refund – Rejection of Unutilised Input Tax Credit (ITC)

Date of Judgment: 24 December 2021

Relevant Sections:

Section 16(3)(a) of the IGST Act, 2017

Rule 89(4)(d) and Rule 92(3) of the CGST Rules, 2017

Section 107 of CGST Act, 2017

Facts of the Case (Paras 1–4.4)

1. [Para 1–2] The petitioner, TTEC India Customer Solutions Pvt. Ltd., is engaged in export of customer solution services, mostly to clients located outside India. It opted to export under LUT without payment of IGST and filed a refund claim of ₹2,84,04,175 for unutilised ITC (Feb 2019 – Mar 2020).
2. [Para 3] A show cause notice dated 16/18-03-2021 was issued under Rule 92(3) proposing rejection of refund to the extent of ₹36,85,893 only.
3. [Para 4–4.2] The petitioner filed detailed reply (RFD-09) and requested virtual hearing due to pandemic. However, a new officer passed an order rejecting the entire refund claim of ₹2,84,04,175 without hearing the petitioner.
4. [Para 4.3–4.4] The petitioner sought rectification of this order and also filed an appeal (GST APL-01), which was not listed for hearing, leading to the present writ petition.

Questions in Consideration (Paras 5, 8–9)

1. Whether the refund rejection order passed without opportunity of hearing is valid?
2. Whether the refund rejection could extend beyond the scope of the show cause notice which was limited to ₹36,85,893?

Observations of the Court (Paras 10–14)

1. [Para 11] The Court held that the authority exceeded the scope of the show cause notice by rejecting the full refund claim instead of only ₹36,85,893, which amounts to a gross procedural irregularity.
2. [Para 12–12.1] The officer who passed the order did not grant a hearing to the petitioner, violating principles of natural justice.
3. [Para 13–13.1] The Court found no need to quash the show cause notice itself but emphasized curing the procedural defect by granting a fresh hearing.
4. [Para 14] The Court avoided entering into merits but reminded the officer to decide the matter strictly within the scope of the show cause notice and as per law.

Judgment of the Court (Paras 13.1, 14)

The High Court quashed the refund rejection order dated 11/13-05-2021. The matter was remitted to the proper officer for re-adjudication in accordance with law, strictly within the scope of the original show cause notice and after giving an opportunity of hearing to the petitioner. Petition allowed.

Between Fine Lines

• Authorities cannot reject a claim beyond the scope of the show cause notice.
• Hearing must be given by the officer passing the order.
• Violation of natural justice principles renders the order unsustainable.
• Procedural breach can be cured without quashing the SCN.
• Refund rejection orders must strictly adhere to procedural and legal mandates.

Summary of Referred Cases

Takeaway

“Beyond the Notice: GST Refund Rejection Set Aside for Procedural Overreach”