The Delhi High Court has directed the CGST Department to process a long-pending refund claim of Rs. 10,65,043 along with statutory interest, observing that the department had failed to trace or properly issue a deficiency memo related to the refund application filed in June 2019.

The bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta  noted that the refund application dated June 12, 2019, was not processed on time despite documents being submitted later in October 2023. The department claimed that a deficiency memo had been issued but conceded it could not be traced.

“There is no valid ground to hold back the refund,” the Court ruled, adding that the refund should be processed within two months, including interest from the date of the application, i.e., June 12, 2019.

The petitioner/assessee had also challenged non-processing of another refund application dated May 17, 2019, for Rs. 9,59,252. The department informed the Court that this claim had been rejected in September 2019 following a show cause notice issued in July that year. However, SISLA Laboratories contended they never received the notice or the rejection order, as neither was uploaded on the GST portal.

Taking a balanced view, the Court held that since the petitioner only became aware of the rejection order in February 2025 (through an additional affidavit filed by the department), they could not be faulted for the delay. The Court, therefore, allowed the petitioner to file an appeal under Section 107 of the CGST Act within one month, and directed that the appeal be decided on merits, without being dismissed on limitation grounds.

Under Section 54 of the CGST Act, refund applications must be filed within two years of the relevant date and should be accompanied by proper documentation. Rule 90(3) mandates that any deficiency in the application must be communicated via Form GST RFD-03 through the portal, which becomes crucial for compliance timelines.

The Court observed that the department’s inability to trace the deficiency memo could not prejudice the taxpayer.  The stand of the department did not assert that documents were never submitted—only that they were not physically provided at the time of filing.

Case Details

Case Title: M/S Sisla Laboratories Versus The Deputy Commissioner Of CGST

Case No.: W.P.(C) 11287/2023

Date:  8th July, 2025

Counsel For  Petitioner: Mukesh Chand Gupta

Counsel For Respondent: Atul Tripathi

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