Under GST Law, Government also provides refunds in many cases. Government has also prepared various provisions so that person filing refund may receive the refund within reasonable time. Rule 90 of CGST Rules, 2017 provide the time limit within an acknowledgement or deficiency letter should be issued to applicant of refund.
As per Rule 90(2) of the CGST Rules, 2017 in case of refund other than claim for refund from electronic cash ledger, proper office should issue acknowledgement in FORM GST RFD-02 within 15 days of filing the refund application. Further, Rule 90(3) of CGST Rules, 2017 states that where any deficiencies are noticed, then the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03 requiring him to file a fresh refund application after rectification of such deficiencies.
In spite of these provisions given under the law, in some cases department was not issuing the acknowledgement or deficiency memo within stipulated time. Hence, applicants were unable to receive refund withing time in various cases.
Now, in case of Jian International Vs Commissioner of Delhi Goods and Services Tax [W.P. (C) 4205/2020 dated 22/07/2020], found that Rules 90 and 91 of CGST/DGST Rules provide a complete code with regard to acknowledgement, scrutiny and grant of refund. The said Rules also provide a strict time line for carrying out the aforesaid activities. For instance, Rules 90(2) and (3) of the DGST Rules states that within fifteen days from the date of filing of the refund application, the respondent has to either point out discrepancy/deficiency in FORM GST RFD-03 or acknowledge the refund application in FORM GST RFD-02. In the event deficiencies are noted and communicated to the applicant, then the applicant would have to file a fresh refund application after rectifying the deficiencies.
In the said judgment it was held that as neither any acknowledgment in FORM GST RFD-02 has been issued nor any deficiency memo has been issued in RFD-03 within time line of fifteen days, the refund application would be presumed to be complete in all respects in accordance with sub-rule (2), (3) and (4) of Rule 89 of CGST/DGST Rules. Consequently, department has lost the right to point out any deficiency
In view of the above judgment it can be concluded that it is the responsibility of department to issue the acknowledgement or deficiency memo within 15 days of refund application. If department does not do so, then it cannot issue deficiency memo at later stage.