CGST waiver of interest and penalty cannot be rejected where proceedings were initiated under section 73, not section 74.

Waiver of interest and penalty under section 128A of the CGST Act was considered in relation to proceedings initiated under section 73. The rejection was based on allegations of input tax credit from non-existing taxpayers, cancelled dealers and return defaulters, but the record showed that the demand had actually been initiated under section 73 and not section 74. On that statutory footing, the basis for refusing waiver could not be sustained. The rejection order was set aside and the authority was directed to reconsider the waiver application and pass a fresh order within thirty days.

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Issues: Whether rejection of the application for waiver of interest and penalty under section 128A of the Central Goods and Services Tax Act, 2017 was sustainable when the underlying proceedings had been initiated under section 73 and not under section 74.

Analysis: The application was made after an assessment order for the relevant tax period and fell within clause (b) of section 128A(1). The rejection was based on the allegation that input tax credit had been availed from non-existing tax payers, cancelled dealers and return defaulters. The relevant statutory distinction was that proceedings based on such allegations ought to proceed under section 74, whereas the record showed that the demand had in fact been initiated under section 73. On that footing, the basis for rejecting the waiver application could not be sustained.

Conclusion: The rejection order was set aside and the authority was directed to reconsider the waiver application and pass a fresh order within thirty days.

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