The Bombay High Court has granted interim protection to a taxpayer after finding prima facie substance in the contention that proceedings under the GST amnesty scheme stood concluded because the proper officer failed to decide the application within the statutory time prescribed under Rule 164 of the Central Goods and Services Tax Rules, 2017.
A Division Bench comprising Justice M.S. Karnik and Justice Sandesh D. Patil directed the authorities not to take any coercive steps against the petitioner until the next date of hearing. The Court also permitted the petitioner to operate his bank account during the pendency of the proceedings.
The petition raises an important issue concerning the consequences of an officer’s failure to decide an application seeking relief under Section 128A of the Central Goods and Services Tax Act, 2017 within the time stipulated under Rule 164.
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During the hearing, counsel for the petitioner drew the Court’s attention to Section 128A of the CGST Act and Rule 164 of the CGST Rules. Rule 164 prescribes the procedure and conditions for closing proceedings under Section 128A in respect of tax demands issued under Section 73 of the Act.
The petitioner submitted that the proper officer had not passed the required order within the time limit prescribed under Rule 164(13). On this basis, reliance was placed on Rule 164(14), which provides that where no order is issued within the specified time, the taxpayer’s application in Form GST SPL-01 or Form GST SPL-02 shall be deemed to have been approved and the proceedings shall be deemed to have concluded.
After considering the submission, the High Court recorded:
“Prima-facie, we find substance in the submission of learned counsel for the petitioner.”
Consequently, the Bench ordered that no coercive steps be taken against the petitioner until the next date of hearing.
Court Allows Operation of Bank Account
Apart from restraining the authorities from initiating coercive action, the High Court specifically permitted the petitioner to operate his bank account in the meantime.
The direction assumes importance because restrictions on bank-account operations can substantially affect a taxpayer’s ability to conduct business and carry out ordinary financial transactions. However, the relief granted by the Court is interim in nature, and the legal issue remains subject to further consideration after the respondents file their reply.
Rule 164 was introduced to prescribe the procedural framework for obtaining the benefit of the waiver provided under Section 128A. It provides for filing applications electronically in Form GST SPL-01 or Form GST SPL-02, depending upon whether the relief is sought against a notice, statement or adjudication order.
Under Rule 164(13), where no notice proposing rejection in Form GST SPL-03 has been issued, the proper officer must issue an order within three months from the date of receiving the taxpayer’s application.
Where a notice in Form GST SPL-03 has been issued, the proper officer must pass an order within three months from the date of receiving the applicant’s reply in Form GST SPL-04. If the applicant does not submit a reply, the order must be issued within four months from the date of the rejection notice.
Rule 164(14) expressly deals with the consequence of non-compliance with these timelines. It states that if the proper officer fails to issue an order within the prescribed period, the application shall be deemed to have been approved and the proceedings shall be deemed to have concluded. The timelines and deemed-approval consequence are contained in the Central Government’s Notification No. 20/2024-Central Tax.
It is this deeming provision that forms the central issue in the writ petition before the Bombay High Court.
Section 128A was introduced to provide conditional waiver of interest, penalty or both in relation to certain non-fraud tax demands raised under Section 73 of the CGST Act for the financial years 2017-18, 2018-19 and 2019-20.
Eligible taxpayers were allowed to settle covered disputes by paying the principal tax demand, subject to compliance with the conditions and timelines prescribed under the Act and Rules. The scheme was intended to facilitate the resolution of pending GST disputes and reduce the burden of interest and penalties relating to the initial years of GST implementation, according to the Ministry of Finance.
Applications against notices or statements are generally filed in Form GST SPL-01, while applications concerning specified adjudication or appellate orders are filed in Form GST SPL-02. The proper officer may accept the application through Form GST SPL-05 or reject it through Form GST SPL-07 after following the prescribed procedure.
The High Court issued notice to the respondents, returnable on October 14, 2026. It directed the respondents to file their affidavit-in-reply within four weeks. The petitioner was granted one week thereafter to file a rejoinder, if necessary.
The Bench also permitted service of private notice and directed that an affidavit of service be filed on the next date.
The Court has not finally adjudicated the petitioner’s entitlement to relief under Section 128A. Its observations are expressly prima facie. The interim order nevertheless protects the petitioner from recovery action and permits operation of the bank account while the Court examines whether the proper officer’s failure to comply with Rule 164(13) resulted in automatic approval of the amnesty application under Rule 164(14).
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