Deficiency Memo Under Rule 90(3) Cannot Be Issued for Time-Barred GST Refund Claims

By | September 15, 2026
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Deficiency Memo Under Rule 90(3) Cannot Be Issued for Time-Barred GST Refund Claims
Issue
Whether a GST refund application can be treated as defective and rejected on the ground of limitation via a deficiency memo under Rule 90(3), or if it requires a show-cause notice under Rule 92(3).
Facts
  • Refund Claim: The assessee filed a GST refund application under Section 54 of the CGST/TNGST Act, 2017.
  • Deficiency Memo Issued: The respondent authority issued a deficiency memo in Form GST RFD-03 under Rule 90(3), treating the refund claim as time-barred at the acknowledgment stage.
  • Assessee’s Contention: The petitioner argued that a deficiency memo under Rule 90(3) is reserved exclusively for curable procedural omissions, whereas rejection of a claim on limitation requires a show-cause notice in Form GST RFD-08 under Rule 92(3).
Decision
  • Improper Path Under Rule 90(3): Limitation is not a remediable or curable deficiency; hence, a deficiency memo under Rule 90(3) cannot be issued on the ground of time-bar.
  • Mandate of Rule 92(3): The proper legal procedure for the proposed rejection of a refund claim (wholly or partly) is the issuance of a show-cause notice under Rule 92(3) in Form GST RFD-08.
  • Proviso Clarification: The proviso to Rule 90(3) excludes the time spent remedying deficiencies from the limitation period, reinforcing that Rule 90(3) applies only to rectifiable defects, not to final adjudications on limitation.
  • Verdict: The writ petition was disposed of by declaring the impugned deficiency memo invalid for further action, while allowing the authority to issue a proper show-cause notice under Rule 92(3). (In favour of assessee)
Key Takeaways
  • Limitation Is an Adjudicatory Issue: Rejection of a refund application on grounds of limitation is a substantive decision that requires issuing a show-cause notice under Rule 92(3) rather than a summary rejection at the acknowledgment stage.
  • Scope of Deficiency Memos (Rule 90(3)): Rule 90(3) deficiency memos (Form GST RFD-03) are limited to curable procedural defects that the taxpayer can rectify and resubmit.
  • Natural Justice & Adjudication: Tax authorities cannot bypass formal show-cause proceedings and fair hearing requirements under Rule 92(3) by misusing acknowledgment-stage deficiency provisions.
HIGH COURT OF MADRAS
L.S. Pacific wood tech (P.) Ltd.
v.
Commercial tax officer
Senthilkumar Ramamoorthy, J.
WP No. 32615 of 2026
W.M.P. No. 35851 of 2026
SEPTEMBER  1, 2026
Ms. N.V. Lakshmi for the Petitioner. Ms. G. Dhana Madhri, Special Govt. Pleader for the Respondent.
ORDER
1. 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.