TaxTMI 
TaxTMI 
A Rs. 30 crore GST refund claim drew 10 SCN objections. Here's why none of them stuck
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs. 30 crore GST refund claim drew 10 SCN objections. Here's why none of them stuck<br>By: - Pradeep Reddy Unnathi Partners<br>Goods and Services Tax - GST<br>Dated:- 11-9-2026<br>A client came to us with a refund claim most consultants would have been nervous to touch. Input tax credit accumulated over Rs. 100 crore. Export turnover over Rs. 100 crore. A refund working out to roughly Rs. 30 crore. At that size, a claim doesn't slide through quietly. It gets read line by line. We went through the Rule 89 workings until every figure could survive that reading. Turnover reconciled to the rupee. Net ITC traced to source documents. Nothing left for an officer to guess at. The department still issued a show cause notice. With 10 se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....parate objections. That's what happens to claims of this size, prepared or not. What matters is what happens next, and that's the part worth writing about. Why a claim this size gets the toughest scrutiny Most GST refund applications move on autopilot. File FORM GST RFD-01, the system checks the numbers against your returns, and if nothing looks unusual, it moves. Large-value claims don't get that autopilot. CBIC's refund processing runs on risk parameters built into the GSTN backend, and value is one of the sharpest triggers in that system. A Rs. 30 crore claim, sitting on top of ITC and export turnover both above Rs. 100 crore, is exactly the profile that gets routed for detailed verification rather than quick ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sanction. There's a reason for that beyond bureaucratic caution. Fake invoicing and circular trading schemes built to generate fraudulent ITC refunds have, historically, clustered at the higher end of the value range, because that's where the payoff justifies the effort. An officer sanctioning a claim this size is putting their name against a number that, if wrong, becomes a serious audit finding against them personally. So the scrutiny isn't personal, and it isn't a signal that anything is wrong with your claim. It's the system doing what it's built to do at that value band. Knowing that going in changes how you prepare. What Rule 89(4) actually asks you to prove For an exporter who ships without payment....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of IGST under a Letter of Undertaking, the refund of accumulated ITC runs through Rule 89(4) of the CGST Rules, 2017: Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC / Adjusted Total Turnover Every term in that formula is a place a claim can go wrong. Net ITC is the input tax credit availed on inputs and input services during the relevant period, as reflected in the electronic credit ledger. It's matched against GSTR-2B on the date you file, not against what your books say you're owed. Turnover of zero-rated supply of goods is capped. The rule takes the lower of your actual invoice value or 1.5 times the value of like goods supplied domestically by you (or a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... similarly-placed supplier), whichever is less. An exporter with export pricing meaningfully above domestic pricing hits this cap, and the excess simply doesn't count toward the refund, whatever the invoice says. Adjusted Total Turnover pulls in your full turnover for the period, state-wise, with exempt supplies (other than zero-rated ones) excluded. Get your exempt supply classification wrong and the denominator moves, and the whole ratio moves with it. At Rs. 100 crore-plus on both the numerator and denominator side, a rounding assumption that costs nothing on a small claim costs lakhs on a claim this size. That's the level of precision the workings had to hold to before we filed. Filing complete isn't the same as fil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing accepted There's a step most exporters miss, and it explains why an SCN can land even on a claim that looks clean. If your application is missing a document or a mandatory declaration, the officer doesn't reject it. Under Rule 90(3), they issue a deficiency memo in FORM GST RFD-03, and that has a sharper consequence than it sounds: the original application is treated as never filed. You refile from scratch, and the 2-year limitation clock under Section 54(1) doesn't pause for the time the deficient application sat on the portal. Clearing the RFD-03 stage means your application is complete. It says nothing about whether the officer agrees with the amount. That decision comes later, under Rule 92(3). If the proper ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....officer forms a view that the claim isn't admissible in whole or in part, whatever the reason, they issue a notice in FORM GST RFD-08, and you get 15 days to reply in FORM GST RFD-09. The rule is explicit on one point: no refund application can be rejected without giving the applicant an opportunity of being heard. That's the notice our client received. The application was complete. At this value, the officer's sign-off needed more than a systems match, and that's what produced the notice. What a claim this size tends to get challenged on Ten objections in one notice sounds unusual until you've seen a few large refund cases go through scrutiny. At this scale, the objections tend to cluster around a recurring set....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of issues, and preparing for a claim like this means having an answer ready for each one before the notice arrives, not after. 1. ITC not reflecting in GSTR-2B for the relevant period, even where the supplier eventually files. Circular No. 125/2019-GST is clear that refund of ITC is restricted to what's actually available in the electronic credit ledger, not what you believe is owed to you. 2. ITC on blocked credits under Section 17(5) slipping into the Net ITC figure, whether by classification error or an input service that sits close to the line. 3. No demonstrated nexus between the input or input service and the export supply, particularly for common inputs used across both domestic and export business. 4. Export proceed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not realised within the timeline Rule 96B contemplates, or BRC/FIRC documentation that doesn't match the shipping bill values on record. 5. Turnover figures that don't tie out between GSTR-3B, GSTR-1, and the underlying shipping bills or export invoices, even where the mismatch is a timing difference rather than a real one. 6. The 1.5x domestic-value cap on zero-rated goods turnover, applied incorrectly or not applied at all in the original working. 7. Credit notes issued after the relevant period that should have reduced turnover or reversed ITC but weren't reflected in the claim. 8. ITC from a supplier whose registration was later cancelled, retrospectively, for a period that falls inside the claim window. 9. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....LUT validity questioned for part of the period, particularly across a financial year boundary where renewal timing gets scrutinised. 10. Adjusted Total Turnover computed on a different turnover base than the one the officer's own systems show, usually from an exempt-supply classification difference. Not every claim draws all 10. A claim this size, spanning multiple months and touching every line of the formula, is exactly the kind that can. How we responded The instinct with a multi-point SCN is to write one strong reply covering the theme. We don't do that. Each of the 10 objections got its own answer, tied to its own working paper. Where an objection turned on a GSTR-2B mismatch, we showed the exact invoice, the sup....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plier's filing date, and the credit ledger entry. Where it turned on nexus, we mapped the specific input service to the specific export order it served. No paragraph in the reply used language that could apply to a different client's file. If a number was asserted, the working behind it was attached. An officer reading a reply that hedges, or that answers the objection in general terms, has no basis to close it. An officer reading a reply with the source document referenced has one. The 2.5 months, and why the clock matters Section 54(7) requires the refund order to be issued within 60 days of a complete application. Miss that, and Section 56 kicks in: interest at 6% per annum runs on the sanctioned amount from the date aft....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the 60 days lapse until the refund is actually paid, whatever the reason for the delay. An SCN with 10 objections, replied to individually with full documentation, doesn't move in days. It took 2.5 months from the original filing to the final sanction order. For a claim of this size and complexity, with a formal notice, a documented reply on every point, and no appeal needed afterward, that's fast. Claims with far fewer objections have taken longer when the reply left the officer room to ask a follow-up question. The result: full amount sanctioned. All 10 objections closed at the reply stage. No partial rejection, no appeal. What this means if you're heading into a large-value claim If your ITC accumulation or exp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ort turnover is approaching the range that draws this kind of scrutiny, the preparation has to happen before you file, not after an SCN lands. Reconcile Net ITC against GSTR-2B, not your books, before the claim goes in. Check every export invoice against the 1.5x domestic-value cap where your export and domestic pricing diverge. Keep BRC/FIRC documentation current as export proceeds come in, rather than chasing it once an objection asks for it. And build the working papers for nexus and classification alongside the claim itself, so a reply to an SCN is a matter of retrieving a document, not building an argument from scratch under a 15-day clock. A claim this size will get read closely regardless. Whether that reading ends in a sanctio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n or a fight comes down to what's sitting behind the numbers when the notice arrives. FAQ Why do larger GST refund claims get more scrutiny than smaller ones? CBIC's refund verification is risk-based, and claim value is one of the strongest risk indicators the system uses. Larger claims, especially where ITC accumulation and export turnover both run high, are more likely to be routed for detailed review rather than automatic sanction. What's the difference between a deficiency memo and a show cause notice in a refund case? A deficiency memo (FORM GST RFD-03, under Rule 90(3)) means your application is incomplete and is treated as not filed at all. A show cause notice (FORM GST RFD-08, under Rule 92(3)) comes after....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the application is accepted as complete, when the officer proposes to reject the claim wholly or partly on merits. You get 15 days to reply in FORM GST RFD-09. Can a GST refund be rejected without giving me a chance to respond? No. Rule 92(3) is explicit that no refund application can be rejected without giving the applicant an opportunity of being heard, in addition to the written reply period. What happens if my refund isn't sanctioned within 60 days? Section 54(7) requires the order within 60 days of a complete application. If it's delayed beyond that, Section 56 provides for interest at 6% per annum on the sanctioned amount, running from the date after the 60-day period until the refund is paid. Does an SCN with ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....multiple objections mean the refund will likely be rejected? Not if each objection is answered individually with the specific working or document it's asking for. A reply that treats the objections as a group, in general language, is the version that tends to end in partial rejection or an appeal. If a refund claim your business is preparing is heading into this range We help exporters build refund workings that hold up before filing, and respond to SCNs where a claim has already been challenged. If your ITC or export turnover is in a range where you expect this level of scrutiny, or you've already received a notice with objections you need answered on merits, write to us at [email protected]. =============<br> Sc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....holarly articles for knowledge sharing by authors, experts, professionals ....