The Uttarakhand High Court has quashed an order rejecting a taxpayer’s GST refund application after finding that the department failed to grant a personal hearing despite a specific request by the applicant. 

The bench of Chief Justice Manoj Kumar Gupta and Justice Subhash Upadhyay has observed that rejection of a refund claim without affording the mandatory opportunity of hearing violates the provisions of the CGST Rules and cannot be sustained in law. 

The dispute arose after the GST authorities rejected a refund application filed under Section 54 of the Central Goods and Services Tax Act on 24 February 2026, holding that the claim was barred by limitation. The taxpayer challenged the rejection before the Uttarakhand High Court, contending that the order had been passed in complete violation of the statutory procedure prescribed under the GST Rules. 

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During the proceedings, the petitioner pointed out that the department had issued a show cause notice on 6 February 2026, to which a detailed reply was submitted on 12 February 2026.

Importantly, the taxpayer had specifically requested that a personal hearing be conducted through virtual mode so that all departmental queries could be clarified before any decision was taken. However, according to the petitioner, no date of hearing was ever communicated and the refund application was rejected directly through the impugned order. 

The State Tax Department argued that the show cause notice itself had granted time up to 13 February 2026 for filing the reply and had also fixed the same date for personal hearing. It further submitted that the taxpayer had an alternative statutory remedy of filing an appeal under Section 107 of the CGST Act, which had not been availed. 

The Bench noted that there was no dispute regarding the fact that the taxpayer had expressly sought a virtual personal hearing in its reply dated 12 February 2026.

The Court observed that despite receiving such a request, the department neither considered it nor fixed any subsequent date for hearing before proceeding to reject the refund claim. This, according to the Bench, amounted to a clear breach of the mandatory procedural safeguards provided under the GST Rules. 

The High Court emphasized that the GST Rules expressly require the authorities to provide an opportunity of hearing before rejecting any refund application.

The Bench held that where an applicant specifically seeks a hearing, particularly through virtual mode, the authorities are required to consider the request and provide an effective opportunity before taking an adverse decision. Passing a rejection order without doing so defeats the very purpose of the statutory safeguard and violates the principles of natural justice. 

Holding that the refund rejection suffered from procedural illegality, the Court quashed the order dated 24 February 2026.

Instead of deciding the refund claim on merits, the Court remitted the matter back to the jurisdictional authority with directions to reconsider the refund application strictly in accordance with law after complying with the mandatory procedural requirements. The writ petition was accordingly allowed and all pending applications were disposed of.

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