Deficiency Memo Cannot Be Issued on the Ground That Refund Application Is Time-Barred — Rejection on Limitation Must Follow Show Cause Notice Route Under Rule 92(3): Madras HC

The Madras High Court has held that a deficiency memo under Rule 90(3) of the CGST Rules cannot be issued on the ground that a refund application under Section 54 is time-barred, and that the appropriate course of action when the respondent proposes to reject a refund claim wholly or partly — including on limitation — is to issue a show cause notice in Form GST RFD-08 under Rule 92(3), affording the applicant an opportunity to be heard. The ruling by Justice Senthilkumar Ramamoorthy in WP No. 32615/2026 (M/s L.S. Pacific Wood Tech Pvt. Ltd., decided 01.09.2026) directed the respondent to issue a show cause notice within two weeks if it intended to reject the refund application.

The court distinguished between the two procedural routes: Rule 90(3) for deficiency memos applies only to remediable defects, with the proviso excluding the period from limitation; Rule 92(3) applies whenever the refund claim is proposed to be rejected on any ground including limitation. Treating a limitation objection as a ‘deficiency’ is impermissible because it effectively results in rejection without hearing, contrary to the proviso to Rule 92(3) which mandates that no refund shall be rejected without opportunity of hearing.

- 2026-juristway.com-2640-HC(Madras)-GST  |  High Court of Madras  |  WP No. 32615 of 2026  |  01.09.2026