Goods & Services Tax (GST) in IndiaAssignment of Reasons: Sine Qua Non for Adjudicating Refund Applications

August 29, 20230

The Delhi High Court, in M/s Chegg India Pvt. Ltd. vs Commissioner of Central Goods and Services Tax [W.P.(c) 14886 of 2022 on July 19, 2023), held that a refund application claiming input tax credit, cannot be rejected without assigning proper reasons for the rejection.


M/s Chegg India Pvt. Ltd. (hereinafter “the Petitioner”) is engaged in the business of marketing, content development and software development and other IT enabled services in education sector.

The Petitioner exports education services to 70 countries and is covered under the scope of Zero Rated supplies under section 16 of the Integrated Goods & Services Tax Act, 2017 (hereinafter “IGST Act”). Hence, the Petitioner filed a refund application of input tax credit (hereinafter “ITC”) relating to input services.

The refund of ITC claim of the Petitioner for the period April 2018 to August 2018, and October 2018 to March 2019 were rejected to the limited extent of the ITC on Common Area Maintenance Charges (hereinafter referred to as “CAM”).

The Commissioner of Central Goods and Services Tax (hereinafter referred to as “the Respondent”) rejected the refund application by an order dated 02.03.2020 to the extent of ITC on the catering charges on CAM.

The Petitioner filed an appeal against the rejection order under Section 107 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST”), which was rejected by the Ld. Appellate Authority vide order dated 21.09.2021 (hereinafter referred to as the “impugned order”).

The Petitioner being aggrieved by the impugned order, has filed the present petition


  1. Whether or not the authorities can reject a refund application of input tax credit without giving proper reasons?


The Petitioner contended that the Ld. Appellate Authority rejected the appeal vide the impugned order by merely referring Section 17(5)(b) of the CGST Act, but has failed to discuss the applicability of the provision.

It was submitted that the impugned order merely stated that the Petitioner was not covered under Section 16 of the CGST Act, but did not state any reasons for the same.


The Delhi High Court observed that the refund application was rejected merely by referring to the section 17(5)(b) of the CGST Act in the impugned order. Moreover, the applicability of the said provision was nowhere discussed.

It was also observed that the impugned order just stated that the Petitioner was not covered under Section 16 of CGST Act, further no reasons were even assigned for the same.

Moreover, the Respondent failed to issue notices as mandated under Rule 92(3) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the “CGST Rules”). Furthermore, the rejection order as well as impugned order failed to provide any reasons for the rejection.

The Delhi High Court set aside the rejection order and impugned order and with liberty to issue fresh notice in accordance with the provisions of law.


The Delhi High Court has upheld that a reasoned order is a sine qua non for the purpose of principles of natural justice. Moreover, an authority cannot merely reject an application by referring to the provisions of law without discussing the applicability of the same.

It is a well settled law that reason introduce clarity in an order. When the authorities pass non-speaking orders, they are denying the opportunity to the taxpayers to contest their reasons, thus amounting to denial of justice. The emphasis on recording reasons is that if the decision reveals the “inscrutable face of the sphinx”, it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system.

-Team AMLEGALS, assisted by Ms. Khanak Sharma (Intern)

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