RFD-08 Notice:

Understanding Section 54 of the CGST Act, 2017

Extract of Section 54 of the CGST Act, 2017

Section 54 of the Central Goods and Services Tax (CGST) Act 2017 provides provisions for refunds of tax, interest, penalty, fees, or any other amount paid under GST. It outlines the conditions and procedures for refund claims and ensures the process is fair and efficient.

Section 54: Refund of Tax

(1) Any person claiming a refund of any tax and interest, if any, paid on such tax or any other amount paid by him may make an application before the expiry of two years from the relevant date, which is the date of payment of the tax or interest, in such form and manner as be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger by the provisions of sub-section (6) of section 49, may claim such refund in return furnished under section 39 in such manner as may be prescribed.

(2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries or any other person or class of persons as may be specified in this behalf by the Government, may claim a refund of tax paid by it on inward supplies of goods or services or both, in such manner as may be prescribed.

RFD-08 Notice

GST RFD-08 is a crucial show-cause notice issued by the GST authorities to taxpayers who have applied for a refund. This notice is issued when the proper officer has reasons to believe that the refund claim is inadmissible either in whole or in part. It is of utmost importance that the taxpayer thoroughly understands this notice, as it requires them to provide explanations and additional documents to substantiate their refund claim.

Example Scenario

Consider a scenario where a business, XYZ Pvt Ltd, applies for a refund of the accumulated Input Tax Credit (ITC) due to zero-rated supplies. Upon reviewing the application, the GST officer identifies discrepancies in the documents submitted and issues an RFD-08 notice to XYZ Pvt Ltd, asking them to explain and justify their refund claim.

Legal Recourse and Proceedings

Legal Recourse

When a taxpayer receives an RFD-08 notice, they should:

  1. Review the Notice: Carefully read the notice to understand the reasons for the proposed rejection or reduction of the refund claim.
  2. Prepare a Response: Gather relevant documents and evidence to support their refund claim and address the issues raised in the notice.
  3. Submit the Response: File the response within the specified time frame, typically 15 days from receipt of the notice.

Legal Proceedings

If the taxpayer fails to respond adequately or if the response is not satisfactory, the GST authorities may proceed with the following:

  • Issue of Refund Rejection Order (RFD-06): The proper officer will issue an order rejecting the refund claim in whole or part.
  • Adjustment of Refund: Any amounts already refunded may be adjusted against future claims or recovered as per the provisions of the CGST Act.

Penalties and Prosecution

Penalties for non-compliance with an RFD-08 notice can include:

  • Denial of Refund: The primary consequence is denying the refund claim, which can affect the business’s cash flow.
  • Interest: If any excess refund has been granted, interest on the excess amount may be levied.
  • Prosecution: In cases of fraudulent claims or willful misstatement, prosecution under GST laws may be initiated, leading to severe penalties and imprisonment.

Do’s and Don’ts on Receiving an RFD-08 Notice


  1. Read Carefully: Understand the reasons for the proposed rejection or reduction of the refund claim.
  2. Gather Evidence: Collect all necessary documents and information to support your refund claim.
  3. Consult a Professional: Seek advice from a GST practitioner or tax consultant to formulate a strong response.
  4. Respond Promptly: Submit your response within the stipulated deadline to avoid rejecting the refund claim.
  5. Maintain Records: Keep copies of the notice and your response for future reference.


  1. Ignore the Notice: Ignoring the notice will lead to the rejection of your refund claim.
  2. Delay Response: Delaying your response can result in rejecting the refund claim and additional interest or penalties.
  3. Provide Incorrect Information: Ensure the information is accurate and complete to avoid further queries or issues.
  4. Disregard Professional Advice: Always consult a professional if unsure about the notice’s content or implications.

Legal Remedy

If a taxpayer believes that the notice is unjust or if the refund claim is rejected despite providing the necessary information, the following remedies are available:

  1. Appeal: The taxpayer can file an appeal against the rejection of the refund claim under Section 107 of the CGST Act within three months from the date of the rejection order.
  2. Review by Higher Authorities: Request a review of the decision by higher authorities if there is a valid ground, such as a procedural error, a misinterpretation of the law, or the discovery of new evidence, to believe that the rejection was not justified.
  3. Reapply for Refund: If the refund claim is rejected, the taxpayer can rectify the issues highlighted and reapply for the refund.


Section 54 of the CGST Act 2017 provides the framework for claiming refunds under GST. The GST RFD-08 notice is integral to this process, allowing tax authorities to ensure that only legitimate refund claims are processed. Understanding how to respond to such notices, the potential penalties, and the available legal remedies can help businesses navigate the refund process smoothly and avoid possible legal issues. Proper preparation and professional guidance, which are crucial in understanding the intricacies of GST regulations, are essential to handling refund claims effectively and ensuring compliance with GST regulations.


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