Bombay High Court Quashes Infinx GST Refund Rejection After Hearing Adjournment Denied Despite Heavy Rains

The Bombay High Court has set aside a GST refund rejection against Infinx Services Private Limited, finding that the tax department shut the company out of the process by deciding the case without giving it a hearing, even after it asked for time citing heavy rains in Mumbai.

A Bench of Justice G. S. Kulkarni and Justice Aarti Sathe held that the order had been passed without affording a personal hearing despite a specific request to reschedule the hearing on account of heavy rains in the city.

“It is a settled principle of law that before passing any orders which are adverse to the assessee, the authorities are duty bound to give a hearing to the assessee,” the court said.

It also reproduced the proviso to Rule 92(3) of the CGST Rules, which states, “Provided that no application for refund shall be rejected without giving the Applicant an opportunity of being heard.”

The court noted that the facts lay “in a narrow compass.” The petitioner had filed its reply to the show cause notice on May 26, 2025 and, by an email of the same date, requested that the hearing be rescheduled as heavy rains in Mumbai prevented physical attendance. The request was not accepted. The Deputy Commissioner thereafter passed the order dated July 2, 2025 ex parte, rejecting the refund claim.

Recording that no personal hearing had been granted, the court found “much substance” in the petitioner's case. It held that, in terms of the proviso to Rule 92(3), it was incumbent on the authority to provide an opportunity of being heard prior to rejecting the refund application.

Infinx Services Private Limited is engaged in providing information technology and information technology enabled services, including business process outsourcing services with a focus on healthcare revenue cycle management and data management services. Its supplies are zero-rated, as its clients are situated outside India.

On April 26, 2025, it filed an application seeking a refund of unutilised input tax credit of about Rs 5.08 crore.

A show cause notice dated May 20, 2025 proposed rejection of the refund claim on the ground that export invoices, foreign inward remittance certificates or advice, and correlation with electronic bank realisation certificates had not been furnished. The petitioner was directed to file its reply within seven days and appear for a hearing on May 26, 2025.

Before the court, the petitioner contended that the order had been passed in contravention of Rule 92(3) of the CGST Rules, which mandates that a period of fifteen days be granted to respond to a show cause notice proposing rejection of a refund claim, apart from requiring an opportunity of hearing.

The revenue opposed the petition, submitting that the petitioner had not objected to the timeline of seven days while filing its reply and had failed to demonstrate any prejudice. It contended that the order had been rightly passed.

Having heard the parties and perused the record, the court held that the petitioner ought to be afforded a fresh hearing in which all contentions can be considered before any order is passed on the refund claim. It also observed that the petitioner's objection regarding the shorter timeline in the show cause notice could be considered by the authority while deciding the matter afresh.

Accordingly, the court quashed and set aside both the show cause notice dated May 20, 2025 and the order dated July 2, 2025.

It directed that a fresh show cause notice be issued within two weeks, that a personal hearing be granted thereafter, and that a speaking order be passed as expeditiously as possible, preferably within three months.

The writ petition was disposed of in these terms.

For Petitioner: Senior Advocate Prakash Shah, with Advocates Mihir Deshmukh and Shamik Gupta instructed by Shardul Amarchand & Mangaldas & Co.

For Respondents: Advocates Jitendra B.Mishra with Sangeeta Yadav, Rupesh Dubey and Umesh Gupta