The Madras High Court has set aside an order rejecting a taxpayer’s application for waiver of GST interest and penalty under Section 128A because the taxpayer had paid the tax through Form GST DRC-03 but had not filed Form GST DRC-03A to link that payment to the demand.
The bench of Justice C. Saravanan has observed that the omission was procedural, subject to verification that the amount had not subsequently been used towards another liability.
Buy Now: E-Magazine: 1000+ Landmark GST Judgments (2017–2026)
The bench observed that failure to file DRC-03A under Rule 142(2B) was procedural in nature, provided the amount paid had not subsequently been debited towards another tax liability. The court said the tax officer should examine the status of the amount. If the payment remained available as described in the order, filing DRC-03A after the event could be permitted.
The appellant/assessee which received an adverse order under Section 73 for the 2018–19 tax period on April 22, 2024. The business paid an amount equivalent to the tax liability through Form GST DRC-03 on June 1, 2024. It later applied for relief under Section 128A on March 5, 2025.
The State Tax Officer rejected the application through an order in Form GST SPL-07 dated September 15, 2025. The stated reason was that the taxpayer had not generated Form GST DRC-03A. The taxpayer challenged that rejection before the Madurai Bench of the Madras High Court.
Section 128A provides for waiver of interest, penalty, or both in eligible cases involving demands under Section 73, subject to the prescribed conditions. Rule 164 sets out the procedure for applying for that relief.
For an application concerning an order under Section 73, Rule 164(2) requires payment of the demanded tax to be credited against the relevant entry in the electronic liability register. Where the taxpayer has already paid through DRC-03, the rule requires a DRC-03A application to credit that payment against the demand before filing Form GST SPL-02.
In this case, the tax payment preceded the Section 128A application, but the taxpayer had not completed the DRC-03A step. The question before the court was whether that omission justified rejecting the waiver application despite the earlier payment.
The court therefore quashed the SPL-07 rejection and sent the matter back to the State Tax Officer for a fresh decision. It did not grant the Section 128A waiver outright; the taxpayer’s eligibility and the payment position remain to be examined.
The taxpayer may file a reply in Form GST SPL-04 to the notice issued in Form GST SPL-03 on June 11, 2025, within 30 days of receiving a copy of the court’s order. If it does so, the officer must decide the matter on its merits and in accordance with law, preferably within three months of the reply. The officer must give the taxpayer due notice before passing the fresh order.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
