Deficiency Memo | HC Rules Compliance Not a New Refund Claim

Case Details: Savex Technologies (P.) Ltd. vs. Union of India - [2025] 174 taxmann.com 178 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & D.N. Ray, JJ.
• Krutarth K. Desai, Abhay Y. Desai, for the Petitioner.
• Neel P. Lakhani, Pradip D. Bhate, for the Respondent.

Facts of the Case

The petitioner, a registered assessee under the CGST Act filed a refund application under Section 54(1) within the prescribed time limit. Upon scrutiny, the jurisdictional officer issued deficiency memos citing certain procedural gaps. The petitioner duly complied with these memos on multiple occasions. However, the refund application was subsequently rejected on the ground of limitation, with the authorities treating the petitioner’s compliance with the deficiency memos as a fresh refund application.

Aggrieved by this, the petitioner filed an appeal before the Appellate Authority, which also dismissed the appeal on identical grounds. In support of their contention that such compliance cannot be equated to a new application, the petitioner placed reliance on the judgment of the High Court in M/s. La-Gajjar Machineries Private Limited v. Union of India & Others The matter was brought before Gujarat High Court.

High Court Held

The Hon’ble Gujarat High Court held that compliance with a deficiency memo issued under Section 54 cannot be treated as a fresh refund application for the purpose of determining limitation. The Court clarified that once an application is filed within the statutory time limit, the subsequent rectification of deficiencies is a continuation of the original process and does not reset the limitation period. Observing that the petitioner had complied with the procedural requirements in good faith, the Court directed that notice be issued to the respondents and listed the matter for further consideration.