As per Section 90(3) of CGST Rules,
(3) Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03 through the common portal electronically, requiring him to file a fresh refund application after rectification of such deficiencies.
As per GST Circular No. 125/44/2019 – GST dated 18th November 2019,
Deficiency Memos
9. It may be noted that if the application for refund is complete in terms of sub-rule (2), (3) and (4) of rule 89 of the CGST Rules, an acknowledgement in FORM GST RFD-02 should be issued within 15 days of the filing of the refund application. The date of generation of ARN for FORM GST RFD-01 is to be considered as the date of filing of the refund application. Sub-rule (3) of rule 90 of the CGST Rules provides for communication of deficiencies in FORM GST RFD-03 where deficiencies are noticed within the aforesaid period of 15 days. It is clarified that either an acknowledgement or a deficiency memo should be issued within the aforesaid period of 15 days starting from the date of generation of ARN. Once an acknowledgement has been issued in relation to a refund application, no deficiency memo, on any grounds, may be subsequently issued for the said application.
10. After a deficiency memo has been issued, the refund application would not be further processed and a fresh application would have to be filed. Any amount of input tax credit/cash debited from electronic credit/ cash ledger would be re-credited automatically once the deficiency memo has been issued. It may be noted that the re-credit would take place automatically and no order in FORM GST PMT-03 is required to be issued. The applicant is required to rectify the deficiencies highlighted in deficiency memo and file fresh refund application electronically in FORM GST RFD-01 again for the same period and this application would have a new and distinct ARN.
Practical difficulties being faced by Assessees in RFD03:
1. RFD 03 is issued after 15 days in few cases, this can be found out centrally by the CBEC in Refund Data.
2. RFD 03 is issued despite submission of complete documents by Assessees. This may be due to gaps in understanding, at Department level. In nascent GST regime , interpretations by Department and assessee can be different.
3. Loss of valuable time to Asseessee, resubmission will be treated as New refund claim. Resubmission of Original claim may be hit by limitation on few occasions
4. No mechanism appears to be available for filing any appeal against RFD 03, so this appears to be against Principles of natural justice.
Suggestions :
1. GST System should not allow issue of RFD03 after 15 days of filing of a refund claim, in such cases only RFD02s can be issued.
RFD03 issued so far after 15 days , to be converted as RFD 02 (Acknowledgements) and jurisdictional authorities to be advised to process such refund claims on merits,
2. GST Rules to be amended to provide
a. At least one opportunity to the Assessee for rectification of discrepancies pointed out in RFD03.
b. File one appeal or representation against RFD03 before the same jurisdictional authority.
Readers may have better suggestions, they are welcome…
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