# GST Refund Claims & Rejections

> A GST refund is claimed in Form RFD-01 on the GST portal within two years of the relevant date. Exporters either pay IGST and get it back automatically against the shipping bill, or export under an LUT and claim refund of unused input tax credit. Businesses whose input tax rate is higher than their output rate can claim the accumulated credit under the inverted duty formula. If the officer proposes rejection, a notice in RFD-08 must be answered in RFD-09, and a rejection order can be appealed within three months.

Practice: Tax Notices & Litigation — https://www.industax.com/services/tax-litigation/

Most refunds are lost or cut on paperwork, not law: a shipping bill that doesn't match GSTR-1, a Rule 89 working that includes ineligible credit, foreign exchange not received for services, or an application filed after the two-year limit. We prepare the claim so the numbers tie out before the officer sees them.

For zero-rated supplies — exports and supplies to SEZ units — 90% of the claim is generally released provisionally soon after acknowledgement, and the officer must decide the claim within 60 days of a complete application; delays beyond that carry interest. Deficiency memos (RFD-03) restart the clock, so a complete first filing matters.

When an officer proposes to reject all or part of a refund, the RFD-08 reply is the last chance to fix it at that level. We answer with reconciliations and case law, and file the appeal if a rejection order still follows.

## Key facts

| Item | Detail |
| --- | --- |
| Application | Form GST RFD-01 on gst.gov.in |
| Time limit | Two years from the relevant date (Section 54) |
| Exports with IGST paid | Shipping bill treated as the refund application; matched with GSTR-1 and GSTR-3B |
| Exports under LUT | Refund of unutilised ITC by the Rule 89(4) formula |
| Inverted duty | Rule 89(5) formula; credit on input services is excluded |
| Rejection | Notice RFD-08, reply RFD-09; order RFD-06; appeal within 3 months with 10% pre-deposit |

## Who needs this

- Exporters of goods and services with input tax credit piling up
- Businesses supplying to SEZ units
- Manufacturers and traders with an inverted duty structure
- Anyone with excess balance in the electronic cash ledger
- Businesses whose refund was cut, delayed or rejected

## What's included

- Eligibility and route check — IGST-paid exports or LUT, inverted duty, excess cash
- Rule 89 refund working and statement preparation
- RFD-01 filing with supporting invoices, shipping bills and FIRC/BRC
- Replies to deficiency memos (RFD-03) and show cause notices (RFD-08)
- Follow-up until the refund order, and appeal drafting if rejected

## Documents

- GSTR-1, GSTR-3B and GSTR-2B for the refund period
- Export invoices and shipping bills, or SEZ endorsements
- Bank realisation certificates or FIRCs for exports of services
- Letter of Undertaking (for LUT exports)
- Purchase register and credit details for inverted duty claims

## Process

1. **Route check** — We confirm the refund type, period and the two-year deadline.
2. **Working** — Rule 89 calculation tied to returns, shipping bills and books.
3. **File RFD-01** — Application with statements and documents uploaded.
4. **Respond** — Deficiency memos and RFD-08 notices answered on time.
5. **Refund or appeal** — Order tracked to credit; rejections taken to appeal.

## FAQs

### How long does a GST refund take?

For exports and SEZ supplies, 90% is generally released provisionally soon after the application is acknowledged, and the officer must pass the final order within 60 days of a complete application. Interest is payable if the refund is delayed beyond that. A deficiency memo means the application is treated as not filed, so the clock restarts.

### Can service exporters claim a GST refund?

Yes. Exports of services under an LUT are zero-rated, and the input tax credit used for them can be refunded through RFD-01, provided payment is received in convertible foreign exchange (or in rupees where RBI permits) and the other export conditions are met.

### Why was my GST refund rejected and what can I do?

Common reasons are mismatches between shipping bills and GSTR-1, ineligible credit in the Rule 89 working, missing proof of foreign exchange, or a claim filed after two years. Before rejecting, the officer must issue a notice in RFD-08; reply in RFD-09 with reconciliations. If a rejection order is still passed, appeal to the Appellate Authority within three months with a pre-deposit of 10% of the disputed amount.

### Is input service credit refundable under the inverted duty structure?

No. The inverted duty refund formula in Rule 89(5) covers credit on inputs (goods) only, not on input services — the Supreme Court upheld this in 2021. Credit on input services stays in your ledger for use against output tax.

## Official sources

- GST portal — Services > User Services > View Notices: https://www.gst.gov.in/
- CBIC — GST law and circulars: https://cbic-gst.gov.in/

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Canonical page: https://www.industax.com/services/tax-litigation/gst-refund-claims
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.