Facts of the Case: In this case, the petitioner filed a refund application under Section 54 of the CGST Act, 2017 for refund of unutilized input tax credit (ITC) on zero-rated supplies made without payment of tax. The original refund application was filed within the statutory limitation period of two years from the relevant date. However, the proper officer issued a deficiency memo in Form GST RFD-03, pointing out certain discrepancies and requiring the petitioner to re-submit the corrected refund application. The petitioner accordingly filed a rectified refund application after curing the deficiencies.

The department, however, rejected the claim on the ground that the rectified refund application was filed beyond the limitation period prescribed under Section 54(1) of the CGST Act, treating it as a fresh refund application rather than a continuation of the earlier one.

Issue: Whether a rectified refund application filed after issuance of a deficiency memo under Rule 90(3) of the CGST Rules, 2017 can be treated as a continuation of the original refund claim filed within the limitation period, or whether it should be considered a fresh application subject to limitation under Section 54(1) of the CGST Act.

Held that:

The Gujarat High Court held that once the original refund application is filed within the prescribed limitation period under Section 54(1), and a deficiency memo is issued thereon, the subsequent rectified refund application filed after removal of deficiencies cannot be treated as a fresh claim.

The Court observed that the issuance of a deficiency memo only points out procedural or technical defects and does not extinguish the substantive right of the taxpayer to seek refund that was initiated within time. Treating the rectified claim as a fresh one would defeat the very purpose of Rule 90(3).

Accordingly, it was held that the rectified application relates back to the date of the original refund application, and therefore, the limitation period ceases to run once the original claim is filed within time. The impugned rejection order was quashed and the department was directed to process the refund on merits.

Case Name: M/s VARIDHI COTSPIN PRIVATE LIMITED v. UNION OF INDIA & ORS. dated 07.10.2025