The refund application, originally filed in June 2019, had remained unprocessed as the Department claimed a deficiency memo had been issued but later admitted it could not be traced.The High Court of Delhi,directed the Goods andService Tax (GST) Department to process a refund of ₹10.65 lakh along with statutory interest, noting there was no valid ground to withhold the claim.

Sisla Laboratories,petitioner-assessee,filed a writ petition seeking processing of two GST refund applications submitted in May and June 2019 for the periods July 2017-March 2018 and June 2018-March 2019. Despite a reminder sent in 2023, the refunds of ₹9.59 lakh and ₹10.65 lakh were not processed, leading to the present petition.

The petitioner counsel, stated that the Department informed them through an additional affidavit that the first refund application filed in May 2019 was rejected after a show cause notice and order in 2019. However, these documents were not uploaded on the portal, so the petitioner was not aware of the rejection.

For the second application filed in June 2019, he said the Department claimed that the records could not be traced, though a deficiency memo had been issued.

The Department’s counsel,submitted that the petitioner submitted the required documents for the first application only in October 2023, and the delay was due to the petitioner’s failure. For the second application, he admitted that the Department could not trace the deficiency memo.

Justice Prathiba M.Singh and Justice Rajneesh Kumar Gupta observed that refund applications under Section 54 of the CGST Act had to be filed within two years from the relevant date and must include supporting documents, unless the refund amount was below two lakh rupees.

If any deficiency was found, it had to be communicated through Form GST RFD-03, and that period would be excluded from the two-year limit. Once the deficiencies were resolved, the refund was to be processed or rejected accordingly.

For the first refund application, the Department claimed it had issued a show cause notice and rejection order in 2019. However, the petitioner said these were never uploaded on the portal and no hearing was granted.

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The court noted that the petitioner came to know about the rejection only in February 2025. It allowed the petitioner to file an appeal under Section 107 of the CGST Act within one month, and directed that the appeal should be heard on merits without being dismissed as time-barred.

For the second application dated 12th June 2019, the Department stated that a deficiency memo was issued but could not be traced. The petitioner submitted the required documents in October 2023, but the refund was not processed.

The court held that in the absence of a traceable deficiency memo, there was no reason to withhold the refund. It directed the Department to process the refund along with statutory interest within two months and disposed of the petition.

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