Withhold / Deduct the refund [Section 54(10) to (12) of CGST Act]

Refund withholding permits deduction or suspension pending returns, appeals or fraud concerns; interest may follow if entitlement is later confirmed.

Sections 54(10)-(12) authorize withholding or deduction of refunds where a registrant has defaulted in returns or remains liable for unpaid tax, interest or penalties not stayed by appeal; the Commissioner may withhold refunds during pending appeals or proceedings where revenue is likely to be prejudiced by malfeasance or fraud, subject to hearing. If entitlement is subsequently established, interest at the notified rate may be payable. Administrative procedure mandates intimation by the integrated tax officer, issuance of withholding orders in Part B of FORM GST RFD-07, refund orders in FORM GST RFD-06, and manual processing until the common portal refund module is functional.