Repeated deficiency memos cannot block GST refunds; fresh

Repeated deficiency memos cannot block GST refunds; fresh applications inherit the original filing date.

Issue

Whether the tax department’s repeated issuance of deficiency memos without adjudicating a petitioner’s multiple refund requests is legally sustainable, and whether a fresh refund application can be allowed while protecting the original limitation date under Section 54.

Facts

Multiple Filings: The petitioner filed a series of successive GST refund applications on October 8, 2024, October 29, 2024, November 18, 2024, and December 5, 2024.
Administrative Inaction: Instead of adjudicating the substance of these requests, the respondents repeatedly issued deficiency memos and failed to formally consider or decide on the refund claims.
Writ Invocation: Facing an administrative standstill, the petitioner approached the High Court by invoking its writ jurisdiction to seek relief against the prolonged inaction.

Decision

Fresh Filing Permitted: The Court held it just and appropriate to permit the petitioner to file a completely fresh, comprehensive refund application within a period of six weeks.
Limitation Date Protected: To prevent the claim from becoming time-barred, the Court directed that the upcoming fresh application must be legally treated as if it were filed on the original date of October 8, 2024.
Exclusion of Intervening Period: The entire intervening period between the first application and the new filing was ordered to be completely excluded for the purposes of calculating the limitation period under Section 54.
Time-Bound Adjudication: The respondents were directed to thoroughly examine the refund claim along with any applicable interest, and pass a speaking order in accordance with Section 54 read with Rule 89 within three months.
Merits Kept Open: The petitioner was granted the liberty to file all supporting pleadings and documents with the fresh claim, while all rival contentions on the merits of the case—except for the limitation issue—were kept open.

Key Takeaways

Deficiency Memos Cannot Block Process: Tax authorities cannot indefinitely stall a legitimate refund claim by trapped in a loop of issuing deficiency memos without ever passing a final order on merits.
Equitable Tolling of Limitation: When an assessee’s delay is caused by systemic bureaucratic loops, courts will exercise writ jurisdiction to backdate fresh applications to protect the taxpayer’s statutory rights from limitation traps.
Preservation of Rights: Remanding a matter with a fixed timeline ensures the revenue retains its right to verify documents, while the taxpayer is protected against hyper-technical rejections based purely on timing.

HIGH COURT OF KARNATAKA

GHS Traders

Union of India^*

S.R.Krishna Kumar, J.

WRIT PETITION NO. 6657 OF 2025 (T-RES)

NOVEMBER 14, 2025

Ganesh V. Shandage, Adv. for the Petitioner. K. S. Bheemaiah, Sushal Tiwari, Advs. and K. Hema Kumar, AGA for the Respondent.

ORDER

1. In this petition, petitioner seeks for the following reliefs:-

“(a) Issue a Writ of Certiorari, or such other Writ, Order or direction in the nature of a Writ of Certiorari, quashing the impugned 4 (Four) deficiency notes in FORM GST RFD-03 bearing Reference No:AA2910240182699 dated 23.10.2024 (ARN)AA291024079887M dated 13.11.2024 (ARN)AA291124045052N dated 03.12.2024 and ZD290125025844C dated 08.01.2025, issued by Respondent No.04 under Rule 90(3) of Central Goods and Services Rules, 2017 (Annexure-B1, Annexure-B2, Annexure-B3 and Annexure-B4 respectively);

(b) Issue a Writ of Mandamus, or such other Writ, Order or direction in the nature of a Writ of Mandamus, to Respondent No.04, to issue acknowledgment in FORM GST RFD-02 in accordance with law against the fresh Refund application on the directions from this Hon’ble court to be submitted by Petitioner in FORM GST RFD-01; and

(c) Pass such other or further orders as this Honourable Court may deem fit and proper in the facts and circumstances of the case, and in the interests of justice and equity, including the costs of this writ petition.

For which act of kindness, the Petitioner shall as in duty bound, ever pray.”

2. Heard learned counsel for the petitioner and learned CGC for respondent No.1, learned counsel for respondent Nos.2 to 5 and learned AGA for respondent No.6 and perused the material on record.

3. Learned counsel for the petitioner submits that despite repeated refund applications at Annexure- A1 dated 08.10.2024, A2 dated 29.10.2024, A3 dated 18.11.2024 and A4 dated 05.12.2024, the respondents have repeatedly issued deficiency memos without considering the refund request of the petitioner, who is before this Court by way of the present petition.

4. It is submitted that the petitioner is ready and willing to file a fresh/new refund application and the same may be construed or treated as having been filed from the date of the first refund application dated 08.10.2024 and the fresh/new refund application to be filed by the petitioner may be directed to be considered as if the same was filed on 08.10.2024 on which date the petitioner filed the first refund application and to dispose of and pass appropriate orders on the fresh/new refund application to be filed by the petitioner including the claim for interest put forth by the petitioner.

5. Per contra, learned counsel for the respondents on instructions submits that if the petitioner files a fresh/new refund application along with supporting documents, the concerned respondents shall consider the refund application in accordance with law without reference to the period of limitation and by treating the fresh/new application as if it was filed on 08.10.2024 which was the date of filing the first refund application and take appropriate decision and pass appropriate orders in accordance with law.

6. In view of the aforesaid facts and circumstances, I deem it just and appropriate to dispose of this petition by issuing certain directions to the respondents.

7. In the result, I pass the following:

ORDER

(i)

The petition is hereby disposed of.

(ii)

The petitioner is reserved liberty to file a fresh/new refund application along with relevant documents within a period of 6 weeks from the date of receipt of a copy of this order.

(iii)

It is further directed that pursuant to the petitioner filing fresh/new refund application along with relevant documents before the concerned respondent, the concerned respondents shall construe/consider/treat the fresh/new refund application to be filed by the petitioner as if the same was filed on 08.10.2024 on which date the first refund application was filed by the petitioner and by excluding the entire period from 08.10.2024 till the date of filing the fresh/new refund application for the purpose of limitation under Section 54 of the CGST Act.

(iv)

Along with fresh/new refund application, the liberty is reserved in favour of the petitioner to file pleadings/documents etc., in support of his claim.

(v)

Pursuant to the petitioner filing the fresh/new refund application, the concerned respondent shall consider the refund claim of the petitioner and pass appropriate orders together with the claim of interest put forth by the petitioner in accordance with the provisions contained in Section 54 of the CGST Act read with Rule 89 of the CGST Rules as expeditiously as possible within a period of three months from the date of petitioner filing fresh/new refund application.

(vi)

Immediately upon the petitioner filing a fresh/new refund application as stated supra, the concerned respondent shall issue an acknowledgment in RFD-02 to the petitioner and proceed further in accordance with law.

(vii)

All rival contentions and all aspects of the matter except limitation are kept open and no opinion is expressed on the same.

(viii)

Liberty is also reserved in favour of the petitioner to take recourse to such other remedies as available in law including approaching this Court, subsequently, if the occasion, so arises.