Omkara Footwear v. Commissioner of CGST
Delhi High Court | W.P.(C) 16263/2022 | Category: Refund of Unutilised ITC
Date of Judgment: 19 October 2023
Relevant Provisions: Sections 16, 54, 107 CGST Act; Rule 89 CGST Rules
Facts of the Case (Paras 1–7)
The petitioner, Omkara Footwear, filed three refund claims aggregating ₹18,00,202 for the period January–March 2020. Each refund application covered unutilised ITC under Section 54 of the CGST Act. The adjudicating authority issued three show-cause notices (SCNs) alleging that ITC had been availed on invoices from “non-existent/high-risk” suppliers, and requested certified copies of invoices and corresponding bank statements.
The petitioner duly furnished all invoices and bank statements. Despite this, the adjudicating authority rejected the refunds on two new grounds:
(1) M/s Yamuna Overseas, a supplier, was allegedly non-existent at its registered premises;
(2) Payments for certain invoices were allegedly made beyond 180 days, contrary to Section 16(2)(d).
The petitioner challenged the orders before the appellate authority under Section 107, but the appeals were dismissed. The petitioner asserted that all suppliers were live dealers, supported by screenshots from the GST portal, and that payments were indeed made within the statutory period. Further, e-way bills and vehicle details were furnished to prove movement of goods.
Critically, the SCNs never disclosed the identity of the allegedly non-existent supplier nor contained any allegation relating to the 180-day payment condition.
Questions / Issues
(Arising from Paras 4, 6, 7 & 8)
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Whether refund could be rejected on grounds not forming part of the show-cause notice, specifically the allegation of delayed payment beyond 180 days under Section 16(2)(d).
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Whether an allegation of a supplier being non-existent can be relied upon without disclosing the name of the supplier in the SCN or providing supporting material.
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Whether the adjudicating authority acted contrary to natural justice by adjudicating on grounds not put to the petitioner.
Court’s Observations (Paras 6–8)
The Court observed that despite the allegations in the refund rejection order, the GST portal screenshot produced by the petitioner indicated that M/s Yamuna Overseas continued to be an active registered supplier. Further, the counter affidavit of the department did not explain this inconsistency.
On the allegation of delayed payments, the Court remarked that no reconciliation statement was produced by the department to support the assertion of delay beyond 180 days.
Most significantly, the Court held that the SCNs did not contain any allegation regarding:
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delayed payment beyond 180 days, or
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the identity of the allegedly non-existent supplier.
Therefore, reliance on grounds not forming part of the SCN vitiated the refund adjudication process. The orders were held to be unsustainable for violating the foundational requirement of putting the assessee to notice.
Judgment / Verdict (Para 9–10)
The High Court set aside:
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the refund rejection orders dated 28.09.2020; and
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the appellate order dated 10.12.2021.
The matter was remanded to the adjudicating authority for a fresh decision.
Given that the allegations (non-existent supplier; payment beyond 180 days) were now expressly on record in the impugned orders, the Court held that no fresh SCN is required, and directed that:
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the petitioner may respond to all allegations;
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a reconciliation of invoice dates and payment dates be furnished within four weeks;
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the adjudicating authority must grant a hearing and pass a fresh order.
The petition was disposed of accordingly.
Cases Referred – Summary Table
| Case | Court’s Holding / Relevance |
|---|---|
| None specifically cited in judgment | The judgment is based purely on principles of natural justice and statutory interpretation under CGST Act. |
Between Fine Lines – Practical Takeaways for Trade
This judgment reiterates that refund claims cannot be rejected on grounds never stated in the show-cause notice. Taxpayers are entitled to a clear articulation of allegations so they may respond effectively. Any deviation from the SCN renders the proceedings void. Departments must also substantiate claims of “non-existent suppliers” with concrete evidence. Screenshots from GST portal showing active registration significantly weaken departmental allegations. The ruling strengthens procedural fairness in GST refund adjudication.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
