Gujarat High Court Holds Ex-Parte GST Refund Order Invalid for Failure to Grant Statutory Adjournment Under Section 75(5)

In a significant ruling, the Gujarat High Court has clarified the mandatory nature of Section 75(5) of the Central/Gujarat Goods and Services Tax Act, 2017, which requires authorities to grant adjournments upon sufficient cause being shown, subject to a maximum of three times during proceedings.

The petitioner sought a writ of mandamus for the refund of excess tax collected and paid under the GST regime, specifically relating to the land portion of a property transaction. After filing the refund application and addressing an initial deficiency memo, the petitioner was issued a show-cause notice proposing rejection of the refund. In response, the petitioner requested an adjournment within the stipulated period, citing the engagement of its consultant in tax audit work. Despite this timely request, the authorities proceeded to pass an ex-parte order on the same day, rejecting the refund application without granting a hearing.

The petitioner argued that this action was in direct contravention of Section 75(5) of the Act and Rule 92(3) of the GST Rules, which collectively mandate that, upon sufficient cause, up to three adjournments must be granted during proceedings. The respondent authorities contended that the petitioner had already been given an opportunity for a personal hearing and was not entitled to further relief.

Upon review, the High Court found that the relevant dates and procedural history were undisputed. The Court noted that the petitioner’s request for adjournment was made within the statutory period and that there was no evidence the petitioner had exhausted the three permissible adjournments. The Court emphasized the language of Section 75(5), which obligates the proper officer to grant time and adjourn the hearing for reasons to be recorded in writing, provided the limit of three adjournments is not exceeded.

The Court held that the ex-parte order was passed in violation of these statutory provisions, as the petitioner’s request for adjournment was neither considered nor responded to, and there was no finding that the statutory limit on adjournments had been reached. Accordingly, the impugned order was quashed and set aside. The matter was remanded to the respondent authority to decide the refund application afresh, strictly in accordance with law, and after affording the petitioner an opportunity of hearing. The Court directed that this process be completed within twelve weeks from the date of receipt of the order.

This decision reinforces the procedural safeguards under the GST Act, underscoring that authorities must adhere to statutory requirements regarding adjournments and the right to be heard before passing adverse orders.