R.J. TECHNOLOGIES vs UNION OF INDIA
- Court
- Gujarat High Court
C/SCA/13116/2025 CAV JUDGMENT DATED: 28/10/2026
(GJHC240655142025)
Reserved On : 19/10/2026
Pronounced On : 28/10/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO.13116 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
===================================================
Approved for Reporting Yes No
✔
===================================================
R.J.TECHNOLOGIES
Versus
UNION OF INDIA & ORS.
===================================================
Appearance:
MR.UCHIT N SHETH(7336) for the Petitioner(s) No.1
MR.UTKARSH R SHARMA(6157) for the Respondent(s) No.1,2,3,4
===================================================
CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
RULE. returnable forthwith. Learned Senior Standing
Counsel Mr.Utkarsh Sharma, waives service of Rule on behalf of
the respondnets.
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1. The present writ petition has been filed by a partnership
firm engaged in the business of supplying electrical transformers,
wires and allied products, seeking to quash and set aside the
order dated 02.07.2025 and for a consequential direction to grant
waiver of interest and penalty by allowing the application filed
under Section 128A of the Central Goods and Services Tax Act,
2017 (for short, “the CGST Act”).
FACTS OF THE CASE :
2. The petitioner filed its returns under the CGST Act for the
Financial Year (F.Y.) 2017-18. Upon subsequently noticing a
mismatch in the Input Tax Credit (for short, “ITC”) reflected in
Form GSTR-3B, prescribed under Rule 61 of the Central Goods
and Services Tax Rules, 2017 (for short, “the CGST Rules”), and
Form GSTR-2A, prescribed under Rule 60 of the CGST Rules, the
petitioner filed Form GST DRC-03 under Rule 142(2) of the CGST
Rules on 04.10.2019, and paid an amount of Rs.31,14,653/-,
representing the entire ITC balance available as on the date of
reversal.
2.1 It is the petitioner’s case that, while filing Form GST DRC-03
on 04.10.2019, it inadvertently mentioned F.Y. 2018-19 instead of
F.Y. 2017-18, although the reversal of ITC pertained to the
mismatch in credit relating to F.Y. 2017-18.
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2.2 On 05.02.2020, the petitioner filed a reconciliation statement
in Form GSTR-9C, prescribed under Rule 80(3) of the CGST
Rules, recording therein that the unreconciled ITC had been paid
through Form GST DRC-03.
2.3 On 05.10.2021, the petitioner made a further payment of
Rs.11,39,200/- through Form GST DRC-03 in respect of another
discrepancy viz. the mismatch between the amounts declared in
Form GSTR-1 and Form GSTR-3B for F.Y. 2017-18. In the said
form, the petitioner correctly mentioned the relevant financial
year.
2.4 On 05.01.2022, the petitioner paid interest on delayed
payment of tax under Section 50 of the CGST Act amounting to
Rs.5,02,000/- for F.Y. 2017-2018.
2.5 Thereafter, the respondent issued an intimation in Form
GST DRC-01A under Rule 142(1A) of the CGST Rules for F.Y.
2017-18, proposing a demand under Section 73 of the CGST Act.
The petitioner submitted its reply to the said intimation on
08.12.2022.
2.6 Subsequently, on 05.01.2023, the respondent issued a show-
cause notice to the petitioner under Section 73 of the CGST Act.
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2.7 The petitioner submitted its reply to the show-cause notice
on 28.03.2023. Thereafter, on 30.11.2023, the adjudicating
authority passed an Order-in-Original raising two demands for
F.Y. 2017-18: (i) a demand on account of a shortfall in output
tax arising from the difference between the amounts declared in
Form GSTR-1 and Form GSTR-3B; and (ii) a demand on account
of excess ITC arising from the difference between Form GSTR-2A
and Form GSTR-3B. While determining the latter demand, the
adjudicating authority declined to give credit for the payment of
Rs.31,14,653/- made through Form GST DRC-03 dated
04.10.2019, on the ground that the financial year mentioned
therein was F.Y. 2018-19 and not F.Y. 2017-18.
2.8 The petitioner challenged the Order-in-Original by filing an
appeal under Section 107 of the CGST Act on 27.02.2024.
However, the first appellate authority, by order dated
24.05.2024, affirmed the Order-in-Original dated 30.11.2023.
2.9 Thereafter, Rule 142(2B) of the CGST Rules was inserted by
the Central Goods and Services Tax (Amendment) Rules, 2024,
with effect from 10.07.2024, providing a mechanism for adjusting
payments made through Form GST DRC-03 against the
corresponding demand by filing Form GST DRC-03A.
2.10 The petitioner thereafter filed Special Civil Application
No.14849 of 2024, challenging the appellate order. During the
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pendency of the said writ petition, Section 128A was inserted
into the CGST Act by the Finance (No.2) Act, 2024, with effect
from 01.11.2024. The said provision provides for the waiver of
interest and penalty in respect of specified tax demands
pertaining to the relevant period, subject to fulfillment of the
prescribed statutory conditions.
2.11 On 18.01.2025, the petitioner filed Form GST DRC-03A
under Rule 142(2B) of the CGST Rules to adjust the payment of
Rs.31,14,653/- made through Form GST DRC-03 dated 04.10.2019
against the liability for F.Y. 2017-18 arising from the order-in-
original dated 30.11.2023.
2.12 On the same date i.e. 18.01.2025, the petitioner filed
another Form GST DRC-03A to appropriate the pre-deposit
amount towards the balance liability reflected in the Electronic
Liability Register for F.Y. 2017-18.
2.13 Both the applications in Form GST DRC-03A were accepted
on the GST portal on 18.01.2025, following which the
outstanding principal tax liability for F.Y. 2017-18 was reduced
to NIL.
2.14 Thereafter, the petitioner withdrew Special Civil Application
No.14849 of 2024 to avail itself of the benefit of the amnesty
scheme introduced under Section 128A of the CGST Act.
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Accordingly, on 25.03.2025, the petitioner filed an application in
Form GST SPL-02 under Section 128A of the CGST Act read with
Rule 164 of the CGST Rules, seeking a waiver of interest and
penalty.
2.15 On 06.05.2025, the competent authority issued a notice in
Form GST SPL-03, proposing to reject the application. The
petitioner submitted its reply on 15.05.2025, pointing out that
the payment had already been adjusted against the demand
through Form GST DRC-03A. The petitioner also furnished copies
of its annual returns for F.Ys. 2018-19 and 2019-20 to
demonstrate that no outstanding liability existed for those
financial years.
2.16 By the impugned order dated 02.07.2025, the competent
authority rejected the petitioner’s application in Form GST SPL-02
on the ground that the payment of Rs.31,14,653/- made through
Form GST DRC-03 dated 04.10.2019 could not be treated as
payment towards the tax liability for F.Y. 2017-18.
2.17 In passing the impugned order, respondent No. 4 also relied
upon the circulars dated 15.10.2024 and 31.03.2025 issued under
Section 128A(1) of the CGST Act.
2.18 Being aggrieved by the aforesaid order dated 02.07.2025,
the petitioner has preferred the present writ petition.
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SUBMISSIONS ON BEHALF OF THE PETITIONER :
3. Learned advocate Mr.Uchit Sheth submitted that the
impugned order rejecting the petitioner’s application under
Section 128A of the CGST Act, filed in Form GST SPL-02,
deserves to be quashed and set aside, as the same has been
passed without proper application of mind.
3.1 It was submitted that the petitioner had clarified that the
payment made through Form GST DRC-03 dated 04.10.2019
pertained to F.Y. 2017-18 and that the reference to F.Y. 2018-19
in the said form was inadvertent.
3.2 It was further submitted that, following the insertion of
Rule 142(2B) of the CGST Rules, which provides a mechanism for
adjusting payments made through Form GST DRC-03 against
specific demands, Form GST DRC-03A was made available on the
GST portal. Accordingly, the petitioner filed Form GST DRC-03A,
pursuant to which the payment previously made through Form
GST DRC-03 was adjusted against the demand raised under
Section 73 of the CGST Act. It was pointed out that both Forms
GST DRC-03A were accepted on the GST portal on 18.01.2025,
reducing the outstanding principal tax liability for F.Y. 2017-18
to NIL. It was, therefore, contended that the statutory condition
under Section 128A of the CGST Act, requiring payment of the
entire principal tax amount, stood fulfilled. Consequently, the
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rejection of the petitioner’s application seeking waiver of interest
and penalty was contrary to law and the object underlying
Section 128A of the CGST Act.
3.3 Learned advocate further submitted that Section 49(7) of
the CGST Act provides for the maintenance of an Electronic
Liability Register in the prescribed manner, recording the
liabilities of a taxable person under the CGST Act. In exercise of
the said provision, Rule 85 of the CGST Rules provides for the
maintenance of the Electronic Liability Register in Form GST
PMT-01, in which amounts payable by a taxable person are
required to be debited. Rule 85(6) further provides that, where a
registered person makes payment towards a demand, the
Electronic Liability Register is required to be credited
accordingly.
It was contended that, since the payment made by the
petitioner through Form GST DRC-03A had already been credited
and adjusted in the Electronic Liability Register on the GST
portal, the officer considering the application under Section 128A
of the CGST Act could not disregard such adjustment and
proceed on the premise that the tax remained payable. Any such
action would amount to an impermissible review of the
adjustment already effected in the Electronic Liability Register.
The impugned order is, therefore, alleged to be without
jurisdiction and contrary to law.
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3.4 It was further submitted that the impugned order was
contrary to Circular No.238/32/2024 - GST dated 15.10.2024,
issued by the Central Board of Indirect Taxes and Customs,
which specifically provides in paragraph 3.2.2 that an amount
paid and adjusted through Form GST DRC - 03A is to be treated
as payment of tax. It was contended that the said circular is
binding on the authorities by virtue of Section 168 of the CGST
Act and that the impugned order, having been passed contrary to
the binding circular, is unsustainable in law.
3.5 It was also submitted that the impugned order defeats the
object, purpose and scheme of Section 128A of the CGST Act,
which was introduced to reduce litigation and provide relief by
waiving interest and penalty in respect of eligible tax demands
pertaining to the initial period of implementation of the GST
regime. It was contended that the competent authority failed to
consider this legislative objective while rejecting the petitioner’s
application.
3.6 In view of the aforesaid submissions, learned advocate for
the petitioner urged that the impugned order be quashed and set
aside and that the petitioner’s application under Section 128A of
the CGST Act be allowed.
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SUBMISSIONS ON BEHALF OF THE RESPONDENTS :
4. Opposing the writ petition, learned Senior Standing Counsel
Mr.Utkarsh Sharma submitted that the writ petition ought not to
be entertained, as the impugned order rejecting the petitioner’s
application under Section 128A of the CGST Act had been passed
in accordance with the provisions of the Act.
4.1 It was submitted that, the petitioner had voluntarily
discharged part of the said liability, amounting to Rs.11,39,200/-,
through Form GST DRC-03 dated 05.10.2021, and hence the
adjudicating authority had duly taken the aforesaid payment into
account and appropriated the same against the total demand of
Rs.15,54,771/- in the Order-in-Original dated 30.11.2023. The
balance amount of Rs.4,15,571/- was accordingly recoverable. It
was, therefore, submitted that the demand had been determined
and confirmed in accordance with law.
4.2 Learned Senior Standing Counsel further submitted that the
petitioner had paid Rs.31,14,653/- through Form GST DRC-03
dated 04.10.2019, comprising IGST of Rs.30,96,013/-, CGST of
Rs.9,320/- and SGST of Rs.9,320/-, and had claimed that the
payment pertained to the discrepancy for the tax period from
April 2017 to March 2018. However, upon scrutiny of the said
form, it was found that the tax period mentioned therein was
April 2018 to March 2019.
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4.3 It was submitted that the aforesaid payment could not be
appropriated against the discrepancy relating to the excess or
irregular availment of ITC reflected in Form GSTR-3B vis-à-vis
Form GSTR-2A for the tax period 2017-18. The adjudicating
authority had afforded adequate opportunity to the petitioner to
furnish documentary evidence and clarifications in support of its
claim. However, no detailed supporting documents or satisfactory
explanation had been furnished. In the absence of substantiating
material, the adjudicating authority, after considering the
available records and submissions, confirmed the demand of
Rs.30,27,040/- on account of wrongful availment of ITC.
4.4 It was further submitted that the payment of Rs.31,14,653/-
made through Form GST DRC-03 dated 04.10.2019 remained
disputed and had not been accepted as an eligible payment by
either the adjudicating authority, namely, the Deputy
Commissioner, Division-VII, CGST, Ahmedabad North, or the
appellate authority, namely, the Joint Commissioner (Appeals),
CGST and Central Excise, Ahmedabad, while passing their
respective orders.
4.5 No further submissions were advanced on behalf of the
respondents.
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ANALYSIS AND OPINION :
5. The material facts giving rise to the present dispute are not
in controversy. The petitioner filed an application in Form GST
SPL-02 under Section 128A of the CGST Act read with Rule 164
of the CGST Rules on 25.03.2025. The last date for filing such an
application was 30.06.2025. The application was, therefore, filed
within the prescribed period of limitation.
5.1 Form GST SPL-02 under Section 128A of the CGST Act
contains a verification requiring the taxpayer to declare that the
information furnished therein is true and correct to the best of its
knowledge and belief. It further provides that any incorrect
declaration or suppression of facts would render the application
void.
5.2 Section 128A of the CGST Act, popularly referred to as the
amnesty scheme, was inserted by the Finance (No.2) Act, 2024,
with effect from 01.11.2024. The provision provides for the
waiver of interest and penalty in respect of specified demands
raised under Section 73 of the CGST Act pertaining to the period
from 01.07.2017 to 31.03.2020, subject to fulfilment of the
statutory conditions. The provision covers the categories of cases
specified in clauses (a), (b) and (c) of Section 128A(1) CGST Act,
including demands arising from orders under Section 73 of the
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CGST Act, orders passed in appeal under Section 107 of the
CGST Act and orders passed in revision under Section 108(1) of
the CGST Act, as applicable.
5.3 Rule 164 of the CGST Rules prescribes the procedure and
conditions for concluding proceedings under Section 128A of the
CGST Act in respect of demands raised under Section 73 of the
CGST Act. The rule requires an eligible taxpayer to file the
prescribed application in Form GST SPL-02, furnishing the
particulars of the relevant order and the details of the payment
made towards the tax demanded. The second proviso to Rule 164
of the CGST Rules stipulates further that if the payment towards
such tax demanded has been made through FORM GST DRC-03,
an application in FORM GST DRC-03A, as prescribed in sub-rule
(2B) of Rule 142 of the CGST Rules, shall be filed by the said
person for credit of the said amount in the Electronic Liability
Register against the debit entry created for the said demand,
before filing the application in FORM GST SPL 02.
5.4 The material precondition for availing the benefit of waiver
of interest and penalty under Section 128A of the CGST Act is
the payment of the entire principal amount of tax covered by the
relevant demand within the prescribed period and in the
prescribed manner. The question arising for consideration is
whether, in the facts of the present case, the payment of
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Rs.31,14,653/- made through Form GST DRC-03 dated
04.10.2019, and subsequently adjusted through Form GST DRC-
03A, could be treated as payment towards the principal tax
liability for F.Y. 2017-18 for the purpose of Section 128A of the
CGST Act.
5.5 The petitioner was subjected to the proceedings under
Section 73 of the CGST Act, culminating in the Order-in-Original
dated 30.11.2023, whereby two demands were raised for F.Y.
2017-18. The first demand, amounting to Rs.15,54,771/-, related
to the shortfall in output tax arising from the difference between
the outward supplies declared in Form GSTR-1, amounting to
Rs.63,04,796/-, and those declared in Form GSTR-3B, amounting
to Rs.47,50,025/-. The second demand, amounting to
Rs.30,27,040/-, related to excess ITC availed and utilised by the
petitioner, which had not been reversed.
5.6 In respect of the first demand, the adjudicating authority
appropriated the amount of Rs.11,39,200/- paid by the petitioner
in cash through Form GST DRC-03 dated 05.10.2021 and directed
recovery of the balance amount of Rs.4,15,571/-, representing the
difference between the total demand of Rs.15,54,771/- and the
amount already paid.
5.7 As regards the second demand of Rs.30,27,040/- relating to
the excess availment of ITC, the adjudicating authority confirmed
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the demand and also imposed a penalty under Section 125 of the
CGST Act. The petitioner challenged the Order-in-Original dated
30.11.2023 by filing an appeal under Section 107 of the CGST
Act. However, the first appellate authority, by order dated
24.05.2024, confirmed the Order-in-Original.
5.8 The petitioner thereafter challenged the appellate order by
filing Special Civil Application No.14849 of 2024. The said writ
petition was subsequently withdrawn on 13.03.2025 to enable the
petitioner to avail itself of the benefit of the amnesty scheme
under Section 128A of the CGST Act.
5.9 In the meantime, on 18.01.2025, the petitioner filed Form
GST DRC-03A under Rule 142(2B) of the CGST Rules to adjust
the payment made through Form GST DRC-03 dated 04.10.2019
against the liability for F.Y. 2017-18 arising from the Order-in-
Original dated 30.11.2023. It is pertinent to note that Rule
142(2B) of the CGST Rules was inserted by notification dated
10.07.2024, with effect from the same date, to provide a
mechanism for adjusting payments made through Form GST DRC-
03 against the corresponding demand. The relevant provision
reads as under :
“142 Notice and order for demand of amounts payable under the
Act.
(2B) Where an amount of tax, interest, penalty or any other amount
payable by a person under section 52 or section 73 or section 74
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[or section 74A] or section 76 or section 122 or section 123 or
section 124 or section 125 or section 127 or section 129 or section
130, has been paid by the said person through an intimation in
FORM GST DRC-03 under sub-rule (2), instead of crediting the said
amount in the electronic liability register in FORM GST PMT-01
against the debit entry created for the said demand, the said person
may file an application in FORM GST DRC-03A electronically on the
common portal, and the amount so paid and intimated through
FORM GST DRC-03 shall be credited in Electronic Liability Register
in FORM GST PMT-01 against the debit entry created for the said
demand, as if the said payment was made towards the said demand
on the date of such intimation made through FORM GST DRC-03.”
5.10 At this stage, reference may be made to Circular
No.238/32/ 2024-GST dated 15.10.2024, issued to clarify various
doubts concerning the implementation of Section 128A of the
CGST Act. The relevant paragraph of the said circular reads as
under:
“3.2.2 With respect to an order referred to in clause (b) and clause
(c) of sub-section (1) of Section 128A, the payment towards such tax
demanded shall be made by the taxpayer, only by the making the
payment against the debit entry created in the Part II of the
Electronic Liability Register (ELR) by the demand order. In this
regard, the procedure mentioned in para 4 of Circular No.
th
224/18/2024-GST dated 11 July 2024 may be referred to. However,
in cases where the payment towards tax demanded in the demand
order has already been made through FORM GST DRC-03, the
procedure prescribed in rule 142(2B) may be followed. In such cases,
the taxpayer shall be required to file an application in FORM GST
DRC-03A as prescribed in the said rule, in order to adjust the amount
already paid vide the FORM GST DRC-03, towards the demand
created in the ELR-Part II, before filing the application for waiver
under Section 128A in FORM GST SPL-02. For the purposes of
determining the date of payment of full amount of tax, the date on
which the amount has been paid through FORM GST DRC-03 may be
considered and not the date on which the said amount has been
adjusted using FORM GST DRC-03A.”
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5.11 Prior to the insertion of Rule 142(2B) of the CGST Rules,
Rule 142 prescribes the procedure for issuing demand notices and
recovering dues from taxpayers. Form GST DRC-03 enables a
taxpayer to make voluntary payments towards tax, interest,
penalty or other amounts, either before or after the issuance of a
show-cause notice. However, a mechanism for adjusting payments
already made through Form GST DRC-03 against a subsequently
determined demand was not available, which could result in
difficulties in appropriating such payments against the
corresponding liabilities.
5.12 Vide Notification No.12/2024-CT dated 10.07.2024, sub-rule
(2B) was inserted in Rule 142 of the CGST Rules, and Form GST
DRC-03A was introduced to provide a mechanism for adjusting
payments previously made through Form GST DRC-03 against the
corresponding demand. The mechanism enables a taxpayer to
seek adjustment of an amount inadvertently paid through Form
GST DRC-03 under Rule 142(2) of the CGST Rules against a
demand arising under the relevant provisions of the CGST Act,
including Sections 52, 73, 74, 76, 122, 123, 124, 125, 127, 129
and 130 of the CGST Act, as applicable. For this purpose, the
taxpayer is required to file Form GST DRC-03A electronically on
the GST portal. Upon such adjustment, the amount paid and
intimated through Form GST DRC-03 is treated as having been
paid towards the corresponding demand on the date of the
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original intimation through Form GST DRC-03. The mechanism
facilitates the adjustment of earlier payments against outstanding
demands reflected in the relevant demand orders and the
Electronic Liability Register.
5.13 Pursuant to the notice issued to the petitioner on filing
Form GST SPL-03, the petitioner in its reply dated 15.05.2025,
clarified that he had already paid Rs.31,14,653/- through Form
GST DRC-03 dated 04.10.2019 and a further amount of
Rs.3,44,262/- through Form GST DRC-03 dated 22.02.2024
towards the liability for F.Y. 2017-18. It was further pointed out
that, upon acceptance of Form GST DRC-03A dated 18.01.2025,
the outstanding demand had been adjusted and the Electronic
Liability Register on the GST portal reflected a Nil balance. The
petitioner, therefore, requested that its application under Section
128A of the CGST Act be accepted.
5.14 However, by the impugned order dated 02.07.2025,
respondent No.4 rejected the petitioner’s application in Form GST
SPL-02. In the discussion and findings recorded in the impugned
order, respondent No.4 acknowledged that the petitioner had
applied for a waiver of interest and penalty in connection with
the order-in-original dated 30.11.2023 and that an amount of
Rs.31,14,653/- had been paid through Form GST DRC-03 dated
04.10.2019. Respondent No.4 further observed that the said
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payment had not been considered either by the adjudicating
authority while passing the Order-in-Original dated 30.11.2023 or
by the appellate authority while deciding the appeal. It was also
noted that the petitioner had challenged the appellate order
before this Court. On that basis, respondent No.4 took the view
that he could not pass any order concerning the aforesaid
payment of Rs.31,14,653/-. In substance, the application was
rejected on the ground that the petitioner had failed to discharge
the tax demand by 31.03.2025.
5.15 The principal issue, therefore, is whether the competent
authority, while considering the petitioner’s application under
Section 128A of the CGST Act, could disregard the adjustment
effected through Form GST DRC-03A, which had been accepted
on the GST portal and had resulted in the outstanding principal
tax liability being reduced to NIL.
5.16 While passing the impugned order, respondent No.4 failed
to appreciate that the petitioner had filed Form GST DRC-03A on
18.01.2025 under Rule 142(2B) of the CGST Rules for adjustment
of the payment made through Form GST DRC-03 dated
04.10.2019. The said application had been accepted on the GST
portal, and the outstanding principal tax liability for F.Y. 2017-18
was consequently reflected as NIL. The petitioner’s case was that
the principal tax liability had thus been discharged, thereby
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satisfying the essential condition for claiming the benefit of
Section 128A of the CGST Act.
5.17 The petitioner’s case before the adjudicating authority was
specific: while making the payment through Form GST DRC-03
dated 04.10.2019, it had inadvertently selected F.Y. 2018-19
instead of F.Y. 2017-18, although the payment pertained to the
reversal of ITC relating to the latter financial year. The petitioner
accordingly sought adjustment of the amount of Rs.31,14,653/-
against the liability for F.Y. 2017-18. However, the adjudicating
authority declined to accept this explanation and confirmed the
demand of Rs.30,27,040/- towards excess availment of ITC,
together with the applicable penalty and interest under the CGST
Act. The petitioner contended that the amount paid through Form
GST DRC-03 exceeded the ITC amount alleged to have been
wrongly availed.
5.18 Even before the appellate authority, the petitioner
specifically contended that the reference to F.Y. 2018-19 in Form
GST DRC-03 was the result of an inadvertent clerical error,
whereas the reversal of ITC pertained to F.Y. 2017-18.
5.19 The petitioner consistently maintained before the
adjudicating authority as well as the appellate authority that the
excess ITC of Rs.30,27,040/- had been inadvertently availed on
account of a clerical error while filing Form GSTR-3B for F.Y.
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2017-18 and that the error had been rectified by paying
Rs.31,14,653/- through Form GST DRC-03 dated 04.10.2019.
However, while making the payment, the petitioner inadvertently
selected F.Y. 2018-19 instead of F.Y. 2017-18, and the error
remained uncorrected in the original form.
It is not the respondents’ case that the petitioner had not
made the aforesaid payment or that the payment had not been
received by the revenue. The petitioner further contended that no
corresponding outstanding tax liability existed for F.Y. 2018-19.
The appellate authority, however, declined to accept the
petitioner’s explanation, principally on the ground that the
amount paid through Form GST DRC-03, namely, 31,14,653/-,
exceeded the disputed ITC amount of Rs.30,27,040/- and that the
financial years mentioned in the payment form and the demand
did not correspond.
The petitioner had also furnished, along with its reply
dated 15.05.2025, copies of its annual returns in Form GSTR-9
for F.Ys. 2018-19 and 2019-20 to demonstrate that no
outstanding tax liability existed for those years. In the absence of
any dispute regarding the existence of such outstanding liability,
the petitioner’s explanation that F.Y. 2018-19 had been
inadvertently mentioned in Form GST DRC-03 instead of F.Y.
2017-18 required due consideration. However, the revenue
without verification proceeded to reject the application SPL 02.
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5.20 In the aforesaid circumstances, the petitioner filed two
applications in Form GST DRC-03A on 18.01.2025: the first
seeking adjustment of the payment of Rs.31,14,653/- made
through Form GST DRC-03 dated 04.10.2019 against the tax
liability for F.Y. 2017-18 arising from the order-in-original dated
30.11.2023, and the second seeking appropriation of the pre-
deposit amount towards the balance liability reflected in the
Electronic Liability Register for the same financial year. Both
applications were accepted on the GST portal, and the
outstanding principal tax liability for F.Y. 2017-18 was reduced
to NIL. Thus, the conditions relating to payment of the principal
tax amount under Section 128A of the CGST Act stood satisfied.
5.21 It is also relevant to refer to Section 49(7) of the CGST Act,
which provides that the liabilities of a taxable person under the
Act shall be recorded and maintained in an Electronic Liability
Register in such manner as may be prescribed. Rule 85 of the
CGST Rules prescribes the manner in which the Electronic
Liability Register is to be maintained in Form GST PMT-01. In
terms of Rule 85(6) of the CGST Rules, where a registered person
makes payment towards a demand, the Electronic Liability
Register is to be credited accordingly, subject to the applicable
provisions.
6. In the present case, both applications filed by the petitioner
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in Form GST DRC-03A on 18.01.2025 were accepted on the GST
portal, and the outstanding principal tax liability for F.Y. 2017-18
was reduced to Nil. In these circumstances, the authority
considering the petitioner’s application in Form GST SPL-02
under Section 128A of the CGST Act was required to consider the
legal effect of the adjustment of tax liability which was reflected
in the Electronic Liability Register as NIL. It is established from
the record that upon acceptance of the Forms GST DRC-03A, the
demand of Rs.34,42,611/- reflected in Form GST DRC-07 dated
15.03.2024 for F.Y. 2017-18 stood adjusted against the payments
of Rs.31,14,653/- made through Form GST DRC-03 dated
04.10.2019 and Rs.3,44,262/- made through Form GST DRC-03
dated 22.02.2024. Hence the tax liability of paying the principal
amount which included interest stood satisfied, showing the tax
liability as Nil.
7. Upon an overall consideration of the facts and the
applicable statutory provisions, we are of the opinion that
respondent No.4 has failed to properly appreciate the material
facts and the effect of the adjustment effected through Forms
GST DRC-03A, which had been accepted on the GST portal. The
impugned order dated 02.07.2025, rejecting the petitioner’s
application in Form GST SPL-02 dated 25.03.2025 under Section
128A of the CGST Act, has, therefore, been passed without
proper application of mind.
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8. Consequently, the writ petition succeeds. The impugned
order dated 02.07.2025 is hereby quashed and set aside. The
respondent authority is directed to accept and process the
petitioner’s application in Form GST SPL-02 dated 25.03.2025
under Section 128A of the CGST Act and pass the consequential
order in accordance with law within a period of twelve weeks
from the date of receipt of this order. It is clarified that in case
the portal does not allow the processing of the application dated
25.03.2025, the respondents shall accept the fresh application
filed by the petitioner either in physical mode or through portal,
and process the same. RULE is made absolute accordingly.
Sd/-
(A. S. SUPEHIA, J)
Sd/-
(VAIBHAVI D. NANAVATI,J)
Pradhyuman/1
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