L. S. Pacific wood Tech Pvt ltd Vs Commercial Tax officer (Madras High Court)
Summary: The petitioner challenged a deficiency memo dated 16 April 2026 stating that its GST refund claim was time barred. It had applied for a refund under Section 54 of the applicable GST statutes.
The petitioner argued that a deficiency memo under Rule 90(3) addresses defects that an applicant can rectify by filing a fresh application. Where the officer instead considers the refund inadmissible, the procedure under Rule 92(3) requires a show cause notice and an opportunity to respond. The Court agreed that a deficiency memo cannot be issued on the ground that a refund application is time barred.
The Court disposed of the writ petition, leaving the respondent free to issue a show cause notice under Rule 92(3) if it intends to reject the claim wholly or partly. Any such notice must be issued within two weeks of receipt of the order. The Court directed that no further action be taken pursuant to the impugned deficiency memo. It closed the connected petition and made no order as to costs. The Court did not decide whether the refund claim itself was within time or direct that a refund be sanctioned.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner had applied for a refund under Section 54 of applicable GST statutes. Deficiency memo dated 16.04.2026 was issued in relation thereto stating that the petitioner’s refund claim was time barred. Said deficiency memo is challenged herein.
2. Relying on sub-rule (3) of Rule 92 of applicable GST Rules, learned counsel for the petitioner submits that a show cause notice in Form GST RFD 01 should be issued if the respondent proposes to call upon the petitioner to show cause as to why the request for refund should be rejected either wholly or in part. Referring to sub-rule (3) of Rule 90, learned counsel submits that a deficiency memo is required to be issued only in cases where a remediable defect is pointed out.
3. Ms. G. Dhana Madhri, learned Special Government Pleader (Tax), appears on behalf of the respondent.
4. Sub-rule (3) of Rule 92 reads as under:
“Where the proper officer is satisfied, for reasons to be recorded in writing, that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in FORM GST RFD-08 to the applicant, requiring him to furnish a reply in Form GST RFD-09 within a period of fifteen days of the receipt of such notice and after considering the reply, make an order in FORM GST RFD-06 sanctioning the amount of refund in whole or part, or rejecting the said refund claim and the said order shall be made available to the applicant electronically and the provisions of sub-rule (1) shall, mutatis mutandis, apply to the extent refund is allowed:
Provided that no refund shall be rejected without giving the applicant an opportunity of being heard.”
5. As can be seen from the text of the sub-rule, this is the appropriate course of action whenever the respondent is of the view that either the whole or a part of the refund claim is liable to be rejected. Sub-rule (3) of Rule 90 deals with deficiencies and prescribes that the applicant would be required to file a fresh refund application after rectifying such deficiencies. The proviso thereto, consequently, provides for an exclusion of said period while computing the limitation period under sub-section (1) of Section 54. As contended by learned counsel for the petitioner, a deficiency memo cannot be issued on the ground that the refund application is time barred.
6. For reasons aforesaid, this writ petition is disposed of by leaving it open to the respondent to issue a show cause notice in terms of Rule 92(3) in case it is intended to reject the refund application of the petitioner wholly or in part. Any such show cause notice shall be issued within two weeks from the date of receipt of a copy of this order. No further action shall be taken pursuant to the impugned deficiency memo. Consequently, connected writ miscellaneous petition is closed. There shall be no order as to costs.
