Appealing a Refund Rejection explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Refund appeals behave differently from demand appeals. The pre-deposit barely applies, the credit may already have been restored, and the appeal can make the position worse.
A refund rejection order in FORM GST RFD-06 is a decision or order of an adjudicating authority, appealable under s.107(1) within three months of communication. But three features make it distinctive: the s.107(6) pre-deposit has little to bite on, because a rejection determines no tax; the rejected amount may already have been re-credited through PMT-03, which affects what is actually in issue; and the first proviso to s.107(11) allows the Appellate Authority to reduce the amount of refund further, after a show cause. A deficiency memo in RFD-03 is not an order at all.
What is and is not appealable
Appealable: the rejection order in FORM GST RFD-06, in whole or in part — an order under s.54(5) and Rule 92(3).
Not appealable: a deficiency memo in FORM GST RFD-03. It is a communication that the application is deficient, not a decision on entitlement. The response is to file a fresh application after rectifying the deficiency, within the two years in s.54(1). Appealing an RFD-03 wastes the appeal and, worse, consumes time that the two-year period does not give back. Rules 90 and 92 →
Also not appealable: a withholding order communicated under s.54(11), which is not a rejection — though the withholding itself, if it lacks the statutory basis, is a writ matter.
The pre-deposit on a refund appeal
Section 107(6) requires:
- (a) in full, the admitted tax, interest, fine, fee and penalty arising from the impugned order; and
- (b) ten per cent of the remaining amount of tax in dispute arising from the said order.
A refund rejection order determines no tax. Nothing arises from it by way of tax, interest, fine, fee or penalty; the taxpayer is not admitting anything and there is no tax in dispute arising from the order.
The proviso, as substituted from 01.10.2025, applies to an order demanding penalty without involving demand of any tax — which a rejection order is not.
So on the text there is no computable pre-deposit. The appeal should state the computation as nil and explain why, rather than leaving the point to be raised at the registry. Section 107 pre-deposit →
The re-credit interaction
Where a refund of input tax credit is rejected, the rejected amount does not simply disappear. Rule 93 and the PMT-03 mechanism re-credit it to the electronic credit ledger.
Two consequences for the appeal:
Check whether the re-credit has happened. If the credit is back in the ledger and usable, the commercial urgency of the appeal falls sharply — the amount is not lost, only its cash form is. Where the business has ongoing output liability, the credit is as good as cash.
Where re-credit has not happened, that is a separate grievance to pursue in parallel with the appeal, because the amount is then neither refunded nor available as credit. Re-credit of rejected refund →
The position differs for a cash refund — an excess balance in the electronic cash ledger, or a refund of tax paid in cash. There is nothing to re-credit as ITC, and the rejection is a straightforward denial of money.
The risk: the first proviso to section 107(11)
"Provided that an order... reducing the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order."
The Appellate Authority may reduce the refund further. An appeal against a rejection of ₹40 lakh out of a ₹1 crore claim can result in a larger part of the claim being rejected — after a show cause.
So the question "can this get worse?" is a real one in refund appeals, and it should be answered before filing. Where the rejection rests on a narrow ground and the sanctioned portion rests on a broader analysis the Appellate Authority might revisit, the risk is material. Section 107(11) →
The protection is the show cause. No reduction may be made without a reasonable opportunity, so the appellant will be told before it happens — and that is the moment to address it, not after.
The grounds that usually decide refund appeals
Limitation. Whether the claim was within two years of the relevant date — and which of the eleven starting points in the Explanation to s.54 applies. This is the ground on which the largest number of refund rejections turn. The relevant date →
The formula. For a zero-rated claim, Rule 89(4) — turnover of zero-rated supply, Net ITC, adjusted total turnover; for inverted duty, Rule 89(5). Rejections frequently rest on a component of the formula having been computed differently. Rule 89(4) →
Documentary evidence. Rule 89(2) lists what must accompany the application; a rejection for want of a document should be met by producing it — subject to Rule 112 on additional evidence. Rule 89(2) →
Unjust enrichment. Section 54(8) and the exceptions, and whether the certificate or declaration was required and filed. Section 54(8) →
Realisation of export proceeds. Where Rule 96B is invoked, whether the period for realisation had expired and whether an RBI extension was obtained. Rule 96B →
Natural justice. Rule 92(3) requires a notice in RFD-08, a reply in RFD-09, and an opportunity of being heard before rejection. A rejection without them is defective.
Practical sequence
- Read the RFD-06 against the RFD-08 notice — was the ground of rejection the ground proposed?
- Check the re-credit in the ledger, and pursue it separately if absent.
- Compute limitation for the appeal from communication.
- State the pre-deposit as nil, with the reasoning.
- Assess the downside under the first proviso to s.107(11).
- Plead the formula and the documents, with the computation annexed.
- Where a fresh application is still within two years, consider whether refiling a corrected claim is faster than appealing — for a deficiency-based rejection it usually is.
- Remember s.115 — where the appeal succeeds and a pre-deposit was in fact paid, interest runs from the date of payment. Sections 114 and 115 →
Key takeaways
- An RFD-06 rejection is appealable; an RFD-03 deficiency memo is not.
- A rejection order determines no tax, so no computable pre-deposit arises.
- Check whether the rejected ITC has been re-credited through PMT-03 — it changes the urgency.
- The first proviso to s.107(11) allows the refund to be reduced further, after a show cause.
- The grounds that decide refund appeals are limitation, the formula, documents, unjust enrichment and realisation.
- Where the two years is still open, refiling a corrected claim may be faster than appealing.
Read next
- Rules 90 and 92: Acknowledgement, Deficiency and Sanction
- Re-credit of a Rejected Refund: PMT-03
- The Relevant Date: Eleven Starting Points for Two Years
- Section 107(11): No Remand, and the Two Provisos
Need a hand with this claim? Our team handles the computation, RFD-01 filing and follow-up to sanction — see GST refund rejection and reply support.
Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition).