HC holds deficiency memo cannot be issued where refund application is accompanied with documents as per CGST Rules

This Tax Alert summarises a recent judgement of the Delhi High Court (HC) ^[1]  dealing with validity of deficiency memo where the refund application was accompanied with relevant documents as specified in Rule 89(2) of Central Goods and Services Tax Rules, 2017 (CGST Rules).

In the present case, taxpayer had filed application for refund of unutilised credit in respect of zero-rated supplies along with supporting documents as prescribed in Rule 89(2). 

However, Revenue did not process the refund application and issued deficiency memo noting that some relevant documents were either not attached or were incomplete. However, the memo did not provide any details of such missing or incomplete documents. 

HC noted that refund application cannot be termed as deficient when it is accompanied by the documents specified in Rule 89(2). Although, the concerned officer is at liberty to call for further documents to process the claim, the fact that such additional documents are not annexed with the application does not render the same deficient. In this regard, HC placed reliance on its own judgement in case of National Internet Exchange of India^[2] .

Basis above, HC has set aside the deficiency memo and directed Revenue to process the refund application in accordance with law.

Comments:

Basis this judgement, taxpayer may challenge deficiency memos issued for not furnishing the documents not covered in Rule 89(2).

[1] 2023 (11) TMI 960 
[2] 2023 (8) TMI 1211