Gujarat HC Orders GST Amnesty Application Processed After Portal Adjustment Reduced Firm’s Tax Demand To Nil

The petitioner, a partnership firm, made a payment of ₹31,14,653 through Form GST DRC-03 in 2019 to reverse excess input tax credit relating to FY 2017–18, but inadvertently specified FY 2018–19 in the form.

In November 2023, the adjudicating authority confirmed demands for FY 2017–18, including a demand for excess ITC, and declined to credit the 2019 payment because the form identified a different financial year; the appellate authority upheld that decision.

After Rule 142(2B) was introduced, the petitioner filed Forms GST DRC-03A in January 2025 to adjust the earlier payment and a further payment against the demand. Both forms were accepted on the GST portal, and the principal tax balance was reduced to nil.

The petitioner’s subsequent application for waiver of interest and penalty under Section 128A was rejected on 2 July 2025, prompting this petition.

Section 128A of the CGST Act provides for waiver of interest and penalty on specified Section 73 demands for the relevant period, subject to payment of the entire principal tax within the prescribed time and manner.

Rule 164 requires an eligible applicant whose tax payment was made through Form GST DRC-03 to file Form GST DRC-03A to credit that payment against the demand before applying in Form GST SPL-02.

Under Rule 142(2B), an amount paid through DRC-03 may be credited to the Electronic Liability Register against the relevant demand through DRC-03A, and is treated as paid towards that demand on the date of the original DRC-03 intimation.

Section 49(7) and Rule 85 provide for recording liabilities and payments in the Electronic Liability Register.

Circular No. 238/32/2024-GST similarly recognises adjustment through DRC-03A for Section 128A purposes and treats the original DRC-03 payment date as the payment date.

The Court found that the petitioner had consistently maintained that the FY 2018–19 entry in the original DRC-03 was an inadvertent error and that the payment related to the FY 2017–18 ITC discrepancy; it also noted that the revenue did not dispute receipt of the payment.

The petitioner subsequently used the prescribed DRC-03A mechanism, and the forms were accepted on the portal, reducing the FY 2017–18 principal tax balance to nil.

The authority deciding the SPL-02 application therefore had to consider the legal effect of those adjustments and the resulting Electronic Liability Register position.

By rejecting the application without properly addressing them, the authority failed to appreciate material facts and the applicable adjustment mechanism.

It directed the respondent authority to accept and process the petitioner’s Form GST SPL-02 application and pass a consequential order in accordance with law within twelve weeks. If the portal does not permit processing, the authority must accept a fresh application in physical or electronic form and process it.