HC: Samadhan Scheme Benefit Valid; Delayed Appeal Withdrawal Not Fatal if Tax Was Paid.

Issue

Can a taxpayer’s application for the GST Samadhan Scheme (under Section 128A) be rejected on the grounds that they failed to withdraw their pending statutory appeal by the scheme’s payment deadline (31.03.2025), even when the full tax amount was already paid much earlier?

Facts

The petitioner was assessed under Section 73 (non-fraud) for tax, interest, and penalty for the 2018-2019 period.
The entire principal tax amount stood paid by the petitioner as of January 2023.
An appeal against the interest and penalty portion of the order remained pending.
A GST Samadhan Scheme was introduced, which fixed 31.03.2025 as the cut-off date for payment of the tax to claim a waiver of interest and penalty under Section 128A.
The petitioner, opting for the scheme, filed their application on 30.06.2025 (within the application deadline).
On the same day (30.06.2025), the petitioner issued a letter to withdraw their pending appeal.
The department sought to deny the benefit, arguing that the appeal was not withdrawn by the 31.03.2025 deadline.

Decision

The High Court ruled decisively in favour of the assessee.
It held that the 31.03.2025 deadline specified in the notification was the cut-off for payment of the tax, not for the withdrawal of the appeal.
The court found that the petitioner had met the substantive requirements of the scheme, as the tax was already paid (well before the deadline) and the application was filed within the allowed time.
The delay in withdrawing the appeal was a procedural issue and could not be used to defeat a substantive claim, especially since the petitioner had shown substantial compliance.
The court, noting that amnesty schemes require a liberal construction, directed the department to allow the benefit under Section 128A and process the application.

Key Takeaways

Liberal Interpretation: Amnesty and settlement schemes (like the Samadhan Scheme) must be interpreted liberally to advance their objective, which is to settle disputes, not to deny benefits on hyper-technical interpretations of deadlines.
Substantial Compliance: The court prioritized “substantial compliance” (tax being fully paid on time) over a minor procedural sequencing issue (the timing of the appeal withdrawal).
Payment Deadline vs. Procedural Deadline: The 31.03.2025 date was strictly a deadline for payment. Since the tax was already paid, the core condition was met.
Right to Waiver Protected: A taxpayer who meets the primary conditions of a waiver scheme cannot be denied the benefit due to a procedural delay that does not cause any prejudice to the revenue.

HIGH COURT OF MADRAS

Sun Tamil Nadu Security Management Services (P.) Ltd.

Commissioner of GST and Central Excise

C.Saravanan, J.

W.P. (MD) No. 21330 of 2025

SEPTEMBER 10, 2025

Raja Karthikeyan for the Petitioner. N. Dilip Kumar, Senior Standing Counsel for the Respondent.

ORDER

1. The Petitioner is before this Court for a Mandamus to direct the 1^st to 3^rd Respondents to accept the Application dated 30.06.2025 filed by the Petitioner under Section 128A of the respective GST enactment for waiver of interest and penalty.

2. The Petitioner had suffered an adverse Assessment Order dated 31.10.2022 in Order in Original No.02/2022 – GST in the hands of the 3^rd Respondent. This was preceeded by a Show Cause Notice dated 04.01.2022 in SCN No.26/2020-2021-GST.

3. Operative portion of the aforesaid Assessment Order dated 31.10.2022 is reproduced below:

“(i)

I confirm the demand of interest of Rs. 11,82,579/-(IGST interest Rs. 1,60,581/- + CGST interest Rs. 5,10,999/-(Rupees Eleven lakhs eighty two thousand five hundred and seventy nine only) for the belated payment of GST amount for the period from July 2017 to March 2018 and demand payment of the same from M/s. Sun Tamilnadu Security Management Services Private Limited, D.No.2, P.No.3, State Bank Officers 2^nd Colony, Bye-Pass Road, Madurai – 625 010 under Section 50(1) of the CGST and TNGST Acts, 2017 read with under Section 73(9) of CGST Act, 2017/Section 73(9) of TNGST Act, 2017 read with Section 20 of the IGST Act, 2017;

(ii)

I appropriate the payment of interest of Rs. 11,81.924/- (IGST interest Rs. 1,58,986/- + CGST interest Rs. 5,11,469/- + SGST interest Rs. 5,11,469/-) towards the demand of interest as per (i) above;

(iii)

I confirm the demand of GST amount of Rs. 1,89,89,748/- (IGST Rs.17,79,488/- CGST Rs.86,05,130/- + SGST Rs.86,05,130/-) (Rupees One Crore eighty nine lakhs eighty nine thousand seven hundred and forty eight only) M/s. Sun Tamilnadu Security Management Services Private Limited for the period 2018-19 under Section 73(9) of CGST Act, 2017/ Section 73(9) of TNGST Act, 2017 read with Section 20 of the IGST Act, 2017;

(iv)

I appropriate the payment of GST amount of Rs. 1,30,46,271/- (IGST Rs.13,25,363/- CGST Rs.58,60,454/- + SGST Rs.58,60,454/-) (One Crore thirty lakhs forty six thousand two hundred and seventy one only) towards the demand of GST as per (iii) above;

(v)

I demand payment of interest of Rs.13,18,490/-(CGST interest Rs.6,59,245/- SGST interest Rs.6,59,245/-(Rupees Thirteen lakhs eighteen thousand four hundred and ninety only) from M/s. Sun Taminadu Security Management Services Private Limited for the belated payment of GST for the period April 2018 to May 2018 under Section 50(1) of the CGST and TNGST Acts, 2017 read with under Section 73(9) of CGST Act, 2017/ Section 73(9) of TNGST Act, 2017 read with Section 20 of the IGST Act, 2017;

(vi)

I confirm the demand for the payment of interest on the amounts of GST as per the demand at (iii) above under Section 50(1) of the CGST and TNGST Act, 2017 read with under Section 73(9) of CGST Act, 2017/ Section 73(9) of TNGST Act, 2017 read with Section 20 of the IGST Act, 2017;

(vii)

I impose a penalty of Rs.18,98,975/- (Rupees eighteen lakhs ninety eight thousand nine hundred and seventy five only) being 10% of the tax demanded on M/s. Sun Tamilnadu Security Management Services Private Limited under Section 73(9) of CGST Act, 2017/ Section 73(9) of TNGST Act, 2017 read with Section 20 of the IGST Act, 2017 for the contraventions as mentioned at (a) to (e) of Sl. 4 above.”

4. The Petitioner thereafter filed an appeal against the aforesaid Assessment Order dated 31.10.2022 under Section 107(1) of the respective GST enactment in A.No.237 of 2023, in so far as confirmation of GST amount of Rs.1,89,89,748/- for the period 2018-2019, appropriation of Rs.1,30,46,271/- out of the aforesaid amount of Rs. 1,89,89,748/- and interest of Rs. 13,18,490/- on the belated payment of GST for the period April 2018 to May 2018 and imposition of penalty for a sum of Rs. 18,98,975/-.

5. Meanwhile, the Government issued Notification No.21/2024-Central Tax dated 08.10.2024 in exercise of power conferred under Section 128A(1) of the CGST Act, 2017. A corresponding Notification was also issued in this regard by the State Government on the same day. Pursuant to the aforesaid Notifications, the Petitioner opted to settle the case under the Samadhan Scheme, as the Petitioner has already paid the tax amount on the dates mentioned above.

6. As per Section 128A(1) of the CGST Act, 2017, which is parametria with Section 128A(1)(c) of the TNGST Act, 2017, the amount of tax is to be paid on or before the date as may be notified by the Government on the recommendation of the GST Council, in which case, no interest under Section 50 of the respective GST enactments and penalty under the Act shall be payable.

7. Under these circumstances, the Petitioner made an application dated 30.06.2025 for settling the dispute in terms of Notification No. 21/2024-Central Tax and the corresponding Notification issued by the State Government both dated 08.10.2024, as per which, the date up to which the payment for tax was payable as per notice or statement of order referred to in Section 128A(1) (a, b or (c) of the CGST Act, 2017 was specified as on 31.03.2025. It is admitted that the Petitioner has paid the remaining tax liability for three months on 27.01.2023 and 28.01.2023.

8. The Petitioner further vide Letter dated 30.06.2025 i.e., on the same day of filing the application under Section 128A(1) of the CGST Act, 2017 requested to withdraw the appeal in AP.No.237/2023 filed against the Assessment Order dated 31.10.2022 pursuant to filing of the aforesaid application under Section 128A(1) of the CGST Act, 2017.

9. The contention of the learned standing counsel for the Respondents is that the application for withdrawal of the appeal i.e., Appeal No.237 of 2023 pending before the Appellate Commissioner ought to have been made on or before the notified date in the Notification No.21/2024-Central Tax dated 08.10.2024 issued under Section 128A(1) of the respective GST enactment i.e., 31.03.2025.

10. It is submitted that even if the appeal was pending, the appeal ought to have been withdrawn. However, application was filed on 30.06.2025 and not before the cut-off date i.e., 31.03.2025 under Notification No.21/2024-Central Tax dated 08.10.2024 and therefore, the application filed for settling the dispute under the Samadhan Scheme in terms of the aforesaid Notification cannot be entertained and therefore, the application has to be rejected.

11. It is the case of the Respondents that since the application for withdrawal of the appeal was made only on 30.06.2025, a conjoint reading of Section 128A(3) of the respective GST enactment r/w proviso to Rule 164(6) and 164(7) of the respective CGST Rules, 2017 would make it clear that the application filed by the Petitioner for waiver of interest and penalty is to be rejected, as the appeal in A.No.237 of 2023 was not withdrawn on or before 31.03.2025.

DISCUSSION:-

12. I have considered the arguments advanced by the learned counsel for the Petitioner and the learned Standing Counsel for the Respondents.

13. For the purpose of disposal of this Writ Petition, it would be useful to refer to Section 128A(1) and 128A(3) of the respective GST enactments. Section 128A(1) and 128A(3) of the CGST Act, 2017 reads as under:

Section 128A. Waiver of interest or penalty or both relating to demands raised under section 73, for certain cases.–

(1) Notwithstanding anything to the contrary contained in this Act, where any amount of tax is payable by a person chargeable with tax in accordance with,–

(a) a notice issued under sub-section (1) of section 73 or a statement issued under sub-section (3) of section 73, and where no order under sub-section (9) of section 73 has been issued; or

(b) an order passed under sub-section (9) of section 73, and where no order under sub-section (11) of section 107 or sub-section (1) of section 108 has been passed; or

(c) an order passed under sub-section (11) of section 107 or sub-section (1) of section 108, and where no order under sub-section (1) of section 113 has been passed, pertaining to the period from 1st July, 2017 to 31st March, 2020, or a part thereof, and the said person pays the full amount of tax payable as per the notice or statement or the order referred to in clause (a), clause (b) or clause (c), as the case may be, on or before the date, as may be notified by the Government on the recommendations of the Council, no interest under section 50 and penalty under this Act, shall be payable and all the proceedings in respect of the said notice or order or statement, as the case may be, shall be deemed to be concluded, subject to such conditions as may be prescribed:

pertaining to the period from 1st July, 2017 to 31st March, 2020, or a part thereof, and the said person pays the full amount of tax payable as per the notice or statement or the order referred to in clause (a), clause (b) or clause (c), as the case may be, on or before the date, as may be notified by the Government on the recommendations of the Council, no interest under section 50 and penalty under this Act, shall be payable and all the proceedings in respect of the said notice or order or statement, as the case may be, shall be deemed to be concluded, subject to such conditions as may be prescribed:

Provided that where a notice has been issued under subsection (1) of section 74, and an order is passed or required to be passed by the proper officer in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court in accordance with the provisions of sub-section (2) of section 75, the said notice or order shall be considered to be a notice or order, as the case may be, referred to in clause (a) or clause (b) of this sub-section:

Provided further that the conclusion of the proceedings under this sub-section, in cases where an application is filed under sub-section (3) of section 107 or under subsection (3) of section 112 or an appeal is filed by an officer of central tax under sub-section (1) of section 117 or under sub-section (1) of section 118 or where any proceedings are initiated under sub-section (1) of section 108, against an order referred to in clause (b) or clause (c) or against the directions of the Appellate Authority or the Appellate Tribunal or the court referred to in the first proviso, shall be subject to the condition that the said person pays the additional amount of tax payable, if any, in accordance with the order of the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority, as the case may be, within three months from the date of the said order.

Provided also that where such interest and penalty has already been paid, no refund of the same shall be available.

(2)….

128A(3):- Nothing contained in sub-section (1) shall be applicable in respect of cases where an appeal or writ petition filed by the said person is pending before Appellate Authority or Appellate Tribunal or a court, as the case may be, and has not been withdrawn by the said person on or before the date notified under sub-section (1).

14. To give effect to the above benefit, the Central Government has also issued Notification No.21/2025-CT dated 08.10.2024 and a corresponding Notification was issued by the State Government for the purpose of availing the benefit under Section128A of the TNGST Act, 2017 on the same day.

15. To avail the benefit of Notification No.21/2025-CT dated 08.10.2024, the tax liability has to be paid within the cut off date mentioned in the said notification and the application has to be filed within the time stipulated in Rule 164 of the respective GST Rules from the date notified in the aforesaid notification. Content of Notification No.21/2025-CT dated 08.10.2024 is extracted hereunder:-

S.O.(E).-In exercise of the powers conferred by sub-section (1) of section 128A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (the said Act), the Central Government, on the recommendations of the Council, hereby notifies the respective date specified in Column (3) of the Table below, as the date upto which payment for the tax payable as per the notice, or statement, or the order referred to in clause (a) or clause (b) or clause (c) of the said section, as the case may be, can be made by the class of registered person specified in the corresponding entry in column (2) of the said Table, namely:-

Table

Sl. No.	Class of registered person	Date upto which payment for the tax payable as per the notice or statement or the order referred to in clause (a) or clause (b) or clause (c) of section 128A of the said Act, as the case may be, can be made for waiver of interest, or penalty, or both, under the said section.
(1)	(2)	(3)
Sl. No.	Class of registered person	Date upto which payment for the tax payable as per the notice or statement or the order referred to in clause (a) or clause (b) or clause (c) of section 128A of the said Act, as the case may be, can be made for waiver of interest, or penalty, or both, under the said section.
1	Registered persons to whom a notice or statement or order, referred to in clause (a) or clause (b) or clause (c) of section 128A of the said Act, has been issued.	31.03.2025
2	Registered persons to whom a notice has been issued under sub-section (1) of section 74, in respect of the period referred to in sub-section (1) of section 128A of the said Act, and an order is passed or required to be passed by the proper officer in pursuance of the direction of the Appellate Authority, or Appellate Tribunal, or a court, in accordance with the provisions of sub-section (2) of section 75, for determination of the tax payable by such person, deeming as if the notice were issued under sub-section (1) of section 73 of the said Act.	Date ending on completion of six months from the date of issuance of the order by the proper officer redetermining tax under section 73 of the said Act.

16. The date for making payment under the above notification for the tax payable as per the notice or statement or order referred to in Clause (a), Clause (b) and Clause (c) of Section 128A(1) of the respective GST enactments for claiming waiver of interest and penalty or both under the aforesaid Section is 31.03.2025.

17. As per Rule 164(6) of the CGST Rules, 2017, any person who wishes to file an application under sub-rule (1) or sub-rule (2), may do so within a period of three months from the date notified under sub-section (1) of Section 128A of the respective GST enactments. In other words, such an application for waiver of interest and penalty has to be filed within three months from the date notified in the Notification issued under Section 128A(1) of the respective GST enactments.

18. Rule 164(7) of the CGST Rules, 2017 mandates that an application under sub-rule (1) or sub-rule (2) shall be accompanied by documents evidencing withdrawal of appeal or writ petition, if any, filed before any Appellate Authority, or Tribunal or Court, as the case may be for an applicant to establish that the applicant is eligible for the waiver of interest or penatly or both, in terms of Section 128A of the CGST Act, 2017.

19. As per proviso to Rule 164(7) of the CGST Rules, 2017, where an applicant has filed an application for withdrawal of appeal or writ petition filed before the Appellate Authority or Tribunal or Court, as the case may be, but the order for withdrawal has not been issued by the concerned authority till the date of filing of such application under sub rule 1 or sub rule 2, the applicant shall upload a copy of application or document filed for withdrawal of said appeal or writ petition along with the application under sub rule 1 or sub rule 2 and shall upload the copy of the order for withdrawal of the said appeal or the writ petition on common portal within one month of the issuance of the said order for withdrawal by the concerned authority.

20. Rule 164(6) and 164(7) of the CGST Rules, 2017 read as under:-

CGST Rules, 2017

Rule 164(6) 164 (6):- Any person who wishes to file an application under sub-rule (1) or sub-rule (2), may do so within a period of three months from the date notified under sub-section (1) of section 128A: Provided that where an application in FORM GST SPL-02 is to be filed in cases referred to in the first proviso to sub-section (1) of section 128A, the time limit for filing the said application shall be six months from the date of communication of the order of the proper officer redetermining such tax under section 73.

Rule 164(7) 164(7):- The application under sub-rule (1) or sub-rule (2) shall be accompanied by documents evidencing withdrawal of appeal or writ petition, if any, filed before any Appellate Authority, or Tribunal or Court, as the case may be, to establish that the applicant is eligible for the waiver of interest or penalty or both, in terms of section 128A: Provided that where the applicant has filed an application for withdrawal of an appeal or writ petition filed before the Appellate Authority or Appellate Tribunal or a court, as the case may be, but the order for withdrawal has not been issued by the concerned authority till the date of filing of the application under sub-rule (1) or sub-rule (2), the applicant shall upload the copy of such application or document filed for withdrawal of the said appeal or writ petition along with the application under sub-rule (1) or sub-rule (2), and shall upload the copy of the order for withdrawal of the said appeal or writ petition on the common portal, within one month of the issuance of the said order for withdrawal by the concerned authority. Provided further that where the notice or statement or order mentioned in sub-section (1) of

21. The facts on record reveal that the Petitioner was proceeded under Section 73 of the respective GST enactments and had suffered an Assessment Order dated 31.10.2022 as detailed above.

22. As against the tax liability of Rs.1,89,89,748/- for the tax period between April 2018 to March 2019 under Section 73(9) of the respective GST enactments, Petitioner has paid a sum of Rs. 1,30,46,721/-. The aforesaid sum was also appropriated vide the aforesaid Assessment Order dated 31.10.2022. Thus, there was a balance of Rs.59,43,477/- [Rs.1,89,89,748/- – Rs.1,30,46,721/-]. The aforesaid amount of Rs.59,43,477/- was also discharged by the Petitioner on the following dates:-

Sl.No.	Date	Period	Amount
1.	27.01.2023	December 2018 to February 2019	Rs.33,62,071/-
2.	28.01.2023	January 2019	Rs.25,84,040/-

23. The application for waiver under Section 128A(1) of the CGST Act, 2017 was filed by the Petitioner on 30.06.2025. As mentioned, the last date for making payment under the said Notification No.21/2025-CT dated 08.10.2024 was 31.03.2025.

24. Admittedly, a sum of Rs.1,30,46,721/- out of Rs.1,89,89,748/-was paid prior to passing of the Assessment Order dated 31.10.2022. The balance sum of Rs.59,43,477/- was paid on the dates mentioned above namely 27.01.2023 and 28.01.2023.

25. The last date for filing the application for waiver of interest and penalty under Section 128A(1) of the respective GST enactment would have expired on 30.06.2025, as is evident from reading of Rule 164(6) of the respective GST Rules.

26. In this case, the application has been filed on 30.06.2025. To that extent, the Petitioner has satisfied the requirements of Section 128A(1)(c) of the Act. Therefore, the application of the Petitioner for waiver under Section 128A(1) of the Act was in time.

27. As per sub-section 3 of Section 128A of the respective GST enactments nothing contained in sub section 1, shall be applicable in respect of cases, where an appeal or a writ petition filed by a person is pending before the Appellate Authority or the Appellate Tribunal or the Court, as the case may be and has not been withdrawn by the said person on or before the date notified under sub-section 1 of Section 128A.

28. The date notified under sub-section 1 is the date specified in Notification No.21/2024-Central Tax dated 08.10.2024 and the corresponding Notification issued by the State Government dated 08.10.2024 under Section 128A(1) of the TNGST Act, 2017, i.e., 31.03.2025.

29. The Petitioner had not withdrawn the appeal on or before the aforesaid cut off date i.e., on 31.03.2025. The Petitioner had however given a letter to the Appellate Authority on the same day of filing the application under Section 128A(1) of the CGST Act, 2017 i.e., on 30.06.2025, undertaking to withdraw the appeal in Appeal No.237 of 2023 pending before the Commissioner of GST and Central Excise (Appeals), Coimbatore at Madurai.

30. As there is substantial compliance with the scheme under Section 128A of the respective GST enactments read with Notification No.21/2024-Central Tax dated 08.10.2024 and the corresponding Notification issued by the State Government dated 08.10.2024 under Section 128A(1) of the TNGST Act, 2017, the delay in withdrawing the appeal should not be put against the Petitioner. The scheme has to construed liberally keeping the object for which Section 128A was inserted in the respective GST enactments.

31. Therefore, the benefit of the aforesaid scheme is to be allowed to the Petitioner as the Petitioner has taken steps to withdraw the appeal in Appeal No.237 of 2023 though under Section 128A(3), the appeal should have been withdrawn on or before the date notified under subsection 1 of Section 128A of the respective GST enactments i.e., 31.03.2025.

32. Therefore, the Writ Petition deserves to be allowed and is accordingly allowed together with consequential direction to the 3^rd respondent to dispose of the application filed by the Petitioner under Section 128(A) in terms of Notification No.21/2024-Central Tax and the corresponding Notification both dated 08.10.2024 issued under the provisions of the GST Act. No costs.