Writ allows waiver application under Section 128A(1), treating petitioner as substantially compliant with Notification No.21/2024 scheme

The HC allowed the writ petition and directed the 3rd respondent to accept and dispose of the application filed under Section 128A(1) for waiver of interest and penalty, treating the petitioner as substantially compliant with the relief scheme in Notification No.21/2024 dated 08.10.2024. Although the appeal withdrawal occurred after the notified date, the Court construed Section 128A liberally and held the delay should not prejudice the petitioner, ordering that the benefit of the scheme be extended and the application be considered in terms of the Notifications.

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ISSUES PRESENTED AND CONSIDERED

1. Whether an application under Section 128A(1) of the respective GST enactments for waiver of interest and penalty is maintainable where the tax payment has been made on or before the notified date but the appeal against the assessment order was not withdrawn on or before the date notified under Section 128A(1).

2. Whether filing the application for waiver under Section 128A(1) within the time prescribed by Rule 164(6) (i.e., within three months from the notified date) satisfies the temporal requirements of Section 128A(1) when withdrawal of the appeal occurs after the notified date but contemporaneously with the application.

3. Interpretation of Section 128A(3) vis-à-vis Rule 164(7) and its proviso: whether non-withdrawal of an appeal by the notified date is an absolute bar to relief under Section 128A or whether substantial compliance and steps taken to withdraw can qualify an applicant for the Samadhan Scheme benefit.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Maintainability of Section 128A(1) application where tax paid on or before notified date but appeal not withdrawn by notified date

Legal framework: Section 128A(1) grants waiver of interest under Section 50 and penalty where full tax payable under notices/orders for the period 1.7.2017 to 31.3.2020 is paid on or before a date notified by Government; Section 128A(3) excludes cases where an appeal or writ petition is pending and has not been withdrawn by the notified date. Notification prescribing 31.03.2025 as the date for payment was issued; Rule 164(6) prescribes filing of the application within three months from the notified date; Rule 164(7) requires accompanying documents evidencing withdrawal of appeal, with a proviso permitting uploading of withdrawal order within one month if the withdrawal application has been filed but order not yet issued.

Precedent Treatment: No prior authority or conflicting precedent is cited in the judgment; the Court proceeds on statutory interpretation and the scheme's object.

Interpretation and reasoning: The Court reads Section 128A(1) and (3) together with Notification No.21/2024 and Rules 164(6)-(7). It finds that payment of tax on or before the notified date is a pre-condition under Section 128A(1)(c) and that the applicant satisfied that requirement by paying the remaining tax on 27-28.01.2023. The Court recognises Section 128A(3)'s bar where appeals remain pending and not withdrawn by the notified date (31.03.2025). However, the Court emphasises that Rules 164(6) and 164(7) provide procedural timelines for filing the application and for evidencing withdrawal, and the proviso to Rule 164(7) contemplates situations where a withdrawal application has been filed but the formal order of withdrawal is not yet issued.

Ratio vs. Obiter: Ratio - The statutory condition of tax payment being made on or before the notified date is jurisdictional and was satisfied; however, the procedural requirement of withdrawal by the notified date under Section 128A(3) is not an absolute bar where there is substantial compliance and contemporaneous steps to withdraw the appeal in furtherance of the statutory object. Obiter - Observations on liberal construction of the scheme and policy considerations.

Conclusion: The application under Section 128A(1) is maintainable despite the appeal not being withdrawn by the notified date where the tax payment condition of Section 128A(1) is satisfied and the applicant has taken contemporaneous and substantive steps to withdraw the appeal; the scheme must be construed liberally to effectuate its object.

Issue 2 - Effect of filing the application within Rule 164(6) timeframe when withdrawal occurred after the notified date

Legal framework: Rule 164(6) requires filing the application under sub-rule (1) or (2) within three months from the notified date (i.e., by 30.06.2025). Rule 164(7) requires evidence of withdrawal of appeal or, per its proviso, allows uploading of withdrawal application with subsequent uploading of the withdrawal order within one month of issuance.

Precedent Treatment: None cited; Court relies on text of rules and notification.

Interpretation and reasoning: The Court distinguishes between the statutory eligibility condition (payment by notified date) and the procedural requirements for seeking the benefit (filing application within three months and evidencing withdrawal). The petitioner filed the Section 128A application on 30.06.2025, which met Rule 164(6)'s deadline. Although the appeal was not withdrawn by 31.03.2025, the petitioner contemporaneously furnished a letter to the appellate authority on the date of filing the Section 128A application undertaking to withdraw the appeal. The Court treats the proviso to Rule 164(7) and the scheme's object as permitting acceptance of such contemporaneous steps and subsequent compliance with formalities, thereby not defeating the substantive entitlement where Rule 164(6) time-limit is met and withdrawal is pursued promptly.

Ratio vs. Obiter: Ratio - Compliance with Rule 164(6)'s filing time-limit by itself, together with prompt steps to withdraw the appeal and the petitioner's fulfillment of the tax payment requirement, suffices to render the application valid; rigid insistence on actual withdrawal by the notified date would frustrate the remedial object of Section 128A. Obiter - Policy preference for liberal construction of amnesty/settlement schemes.

Conclusion: Filing the application within the Rule 164(6) timeframe validates entitlement under Section 128A where the applicant has also taken immediate and substantive steps to withdraw the appeal, notwithstanding actual withdrawal occurring after the notified date, provided the procedural safeguards of Rule 164(7) and its proviso are respected.

Issue 3 - Scope and effect of Section 128A(3) and interplay with Rule 164(7) proviso regarding withdrawal of appeals

Legal framework: Section 128A(3) disqualifies applicants whose appeals/writs are pending and have not been withdrawn on or before the notified date. Rule 164(7) and its proviso elaborate documentary requirements and permit filing evidence of withdrawal application when formal withdrawal order is not yet issued, with an obligation to upload the withdrawal order within one month of issuance.

Precedent Treatment: Not addressed; Court applies textual and purposive construction.

Interpretation and reasoning: The Court interprets Section 128A(3) as a substantive bar but recognises that the Rules (especially the proviso to Rule 164(7)) contemplate administrative realities (delay in issuance of withdrawal orders). The Court adopts a purposive reading: where there is substantial compliance with the scheme (payment by notified date, filing of the Section 128A application within Rule 164(6) period, prompt application to withdraw the appeal, and capacity to produce the withdrawal order in accordance with Rule 164(7) proviso), the strict temporal bar in Section 128A(3) should not defeat the statutory object. The Court underscores that the scheme must be construed liberally to achieve its remedial purpose and not be rendered nugatory by formal noncompliance when substantial compliance is demonstrated.

Ratio vs. Obiter: Ratio - Section 128A(3)'s disqualification for non-withdrawal by the notified date is subject to a pragmatic application where procedural rules allow for subsequent formalization of withdrawal and where substantial compliance with scheme requirements is established. Obiter - General remarks on liberality in construing settlement schemes.

Conclusion: Section 128A(3) does not operate as an absolute bar where the applicant demonstrates substantial compliance with the statutory scheme and has taken immediate steps to withdraw the appeal; applicability of the waiver should be determined by giving effect to the scheme's object and by permitting reliance on Rule 164(7) proviso mechanisms.

Relief and Direction

Having found that the petitioner satisfied the tax-payment condition under Section 128A(1)(c), filed the application within Rule 164(6) time-limit, and took contemporaneous steps to withdraw the appeal (with capacity to comply with Rule 164(7) proviso), the Court held that the delay in formal withdrawal should not defeat entitlement under Section 128A. The Court directed the appropriate authority to dispose of the Section 128A application in terms of Notification No.21/2024-Central Tax and the corresponding State Notification dated 08.10.2024.

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