Bona fide deposit in Electronic Cash Ledger within amnesty window entitles taxpayer to Section 128A benefits despite delayed form submission

By | October 28, 2026
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Bona fide deposit in Electronic Cash Ledger within amnesty window entitles taxpayer to Section 128A benefits despite delayed form submission

Issue

  • Whether a taxpayer who credited the entire tax liability into the Electronic Cash Ledger within the notified amnesty period is entitled to the waiver of interest and penalty under Section 128A, even if the formal settlement form (DRC-03A) for appropriation to the Electronic Liability Register was submitted after the prescribed cutoff date.

Facts

  • Assessment & Amnesty Scheme: An assessment order was passed against the petitioner (a registered taxpayer) for FY 2018-19. Subsequently, an amnesty scheme under Section 128A was notified for the settlement of pending tax demands.
  • Timely Deposit: The petitioner applied for settlement and deposited/credited the entire tax liability into the Electronic Cash Ledger on March 31, 2025, prior to the expiry of the amnesty cutoff date.
  • Delayed Form Filing: Due to a procedural oversight, the settlement form required to appropriate the funds from the Electronic Cash Ledger to the Electronic Liability Register was not submitted by the cutoff date; it was eventually furnished on June 30, 2025.
  • Rejection by Revenue: The proper officer issued a Show Cause Notice proposing rejection of the amnesty benefit on account of belated form filing, followed by an order rejecting the settlement application.
  • Writ Challenge: The petitioner filed a writ petition before the High Court challenging the rejection order.

Decision

  • Recognition of Bona Fide Compliance: The deposit of funds into the Electronic Cash Ledger on March 31, 2025—within the amnesty window—was undisputed and clearly established the petitioner’s bona fides to settle the demand.
  • Application of Cash Deposit Date Principle: Drawing support from the underlying principles of Section 49 and Rule 87, the date of credit to the Electronic Cash Ledger is treated as the date of payment receipt by the government.
  • Purposive Interpretation of Remedial Scheme: The primary objective of an amnesty scheme is dispute resolution and relief. A minor procedural delay in submitting the appropriation form should not defeat the substantive benefit when full payment was timely deposited.
  • Quashing of Rejection Order: The rejection order was quashed. The deposit made on March 31, 2025, combined with the subsequent DRC-03A filing, was held to be due compliance, and the authorities were directed to grant the Section 128A amnesty benefits.

Key Takeaways

  • Substance Over Procedural Delays in Amnesty Schemes: Substantive compliance by depositing full tax dues within the statutory window takes precedence over minor procedural lapses, such as delayed filing of appropriation forms.
  • Date of Cash Ledger Credit as Payment Date: Payment credited to the Electronic Cash Ledger within the prescribed deadline constitutes valid payment for assessing compliance under beneficial settlement schemes.
  • Liberal Construction of Beneficial Provisions: Remedial provisions and amnesty schemes under Section 128A must be interpreted liberally to fulfill their intended purpose of reducing litigation and settling old tax demands.
HIGH COURT OF KERALA
Baama Ventures
v.
State Tax Officer
ZIYAD RAHMAN A.A., J.
WP(C) NO. 10774 OF 2026
OCTOBER  6, 2026
K.N. Sreekumaran and P.J. Anilkumar, Advs. for the Petitioner. Rajesh K. Raju, V.V. Suresh, Advs. and Smt. Sindhu Santhalingam, Sr. G.P. for the Respondent.
JUDGMENT
1. The petitioner is a registered tax payer under the provisions of the CGST Act. The grievance of the petitioner is against Ext.P6 order passed by the 1st respondent, by which, the application submitted by the petitioner under Section 128A of the CGST Act, for availing the Amnesty was rejected. The reliefs sought by the petitioner are as follows:
“(a) issue a Writ of certiorari or any other order or direction quashing Exts-P6 order issued by the 1st respondent.
(b) direct the 1st respondent to reconsider Ext-P3 application and grant the benefit of waiver of interest and penalty under Section 128A of the CGST Act read with Rule 164 of the CGST Rules by treating the tax remitted on 31.03.2025 as valid compliance with the conditions of the amnesty scheme.
(c) pass such other orders as this Honorable Court may deem fit to grant in the circumstances of the case.”
2. The petitioner suffered an order of assessment, as evidenced by Ext.P1, pertaining to the year 2018-19. In the meanwhile, the Central Government introduced Section 128A, as a special Amnesty provision providing waiver of interest and penalty, in respect of the demands raised under Section 73 of the CGST Act, for the specified tax period. As the petitioner was eligible to get the liability settled by availing the Amnesty Scheme, an application in this regard, as evidenced by Ext.P3, was submitted. The petitioner also affected the payment in the Electronic Cash Ledger on 31.03.2025, for settling the entire liability covered by Ext.P1, in terms of the provisions contained under the Scheme.
3. However, the petitioner omitted to submit FORM GST DRC-03A, for appropriating the said amount to Electronic Liability Register, as mandated under Rule 164 of the CGST Rules. The petitioner came to know about the said omission only later, and immediately thereupon, the petitioner submitted FORM GST DRC-03A, on 30.06.2025, even though the payment was actually affected on 31.03.2025. The first respondent issued Ext.P4 show cause notice on 30.10.2025, proposing to reject the application submitted by the petitioner for availing the Amnesty Scheme, on the reason that, the petitioner had failed to submit the FORM GST DRC-03A before the last date, which was 31.03.2025. Even though the petitioner submitted a reply, as evidenced by Ext.P5, rejecting the said objection, Ext.P6 order was passed, dismissing the application submitted by the petitioner for Amnesty Scheme. This writ petition is submitted by the petitioner in challenging the said order.
4. Heard the learned counsel for the petitioner and the learned Government Pleader for the respondents.
5. The learned counsel for the petitioner submits that, even though the petitioner paid the amount in the Electronic Cash Ledger, within the time specified as per the Scheme, due to an oversight, the petitioner could not submit the FORM GST DRC-03A, within the said time, and upon realizing the said mistake, it was submitted on 30.06.2025. Therefore, the petitioner submits that, as the petitioner has already affected the payment within the period stipulated, an interference is required in Ext.P6 order passed, by rejecting the application submitted by the petitioner seeking to avail the Amnesty Scheme.
6. The learned counsel for the petitioner also brought to the attention of this Court, the proviso to Rule 88(B)(1) of the CGST Rules, that deals with the liability of the taxpayer to pay interest for the belated payment of tax. It is pointed out that, as per the said proviso, in cases where, the amount has been credited in the Electronic Cash Ledger, before the due date of filing the return, but is debited from the said ledger for payment of tax by filing the return after the due date, the said amount shall not be taken into consideration, while calculating such interest, if the said amount was lying in the said ledger from due date till the date of its debit at the time of filing the return. Thus, it is contended that, since the Rules specifically exonerate the taxpayer from the liability to pay interest, if the amount is credited in the Electronic Cash Ledger within the due date, the same principle can be applied here also.
7. On the other hand, the learned Government Pleader would oppose the aforesaid contention, by bringing to the notice of this Court, the proviso to Rule 164(2) of the CGST Rules, where, the mode of payment to be affected for availing the benefit of Section 128A is contemplated. As per the said provision, the payment towards such tax shall be made only by crediting the amount in the Electronic Liability Register against the debit entry created by the said order.
8. According to the learned Government Pleader, the payment as referred to above is absolutely necessary. It is pointed out that, in order to avail the benefit of the Amnesty Scheme as contemplated under Section 128A of the CGST Act, the amount must be credited to the Electronic Liability Register and the payment to Electronic Cash Ledger is not sufficient. In this case, since the petitioner failed to do so within the last date stipulated, the petitioner is not entitled to any relief. Therefore, no interference is required in Ext.P6, points out the learned Government Pleader.
9. After carefully going through the records and examining the statutory provisions, I find some merits in the contention put forward by the learned counsel for the petitioner. Of course, it is true that, proviso to Rule 164(2) contemplates the mode in which the payment is to be affected for the purpose of availing the benefit under the Scheme of settlement. However, it is a fact that, the petitioner has fulfilled the aforesaid obligation, even though belatedly.
10. The specific case of the petitioner is that, the petitioner could not submit the FORM GST DRC-03A, which is in fulfillment of the requirement contemplated under Rule 164(2), due to an oversight, and immediately upon knowing the same, the petitioner took the necessary steps in this regard on 30.06.2025. In the meantime, there occurred a delay of above 90 days. It is also evident from the records that, the petitioner had in fact, paid the amount required for availing the settlement under the Amnesty Scheme on 31.03.2025, by crediting the same into the Electronic Cash Ledger. This fact is also not disputed. Therefore, the bona fides on the part of the petitioner is evident, as the petitioner had deposited the amount for the purpose of availing the benefit, within the statutory period stipulated, i.e., on 31.03.2025. Even though the stipulation contained in the proviso to Rule 88(B)(1) cannot be straightaway made applicable to the case of the petitioner, the purpose behind the incorporation of the said rule, will have some relevance, while considering this issue. This is because, as per the proviso referred to above, the amount credited in the Electronic Cash Ledger is taken as the date on which the amount is received by the State, for the purpose of determining the liability of the taxpayer to pay the interest. Thus, it is evident that some sanctity is attached to the date on which, the amount is credited in the Electronic Cash Ledger.
11. Therefore, I am of the view that, since the petitioner has credited the amount in the Electronic Cash Ledger within the period contemplated for availing the Amnesty benefit under Section 128A, taking note of the principle that prompted the formulation of proviso to Rule 88(B), the petitioner can be treated as a person entitled to the benefit of the Amnesty Scheme.
12. As mentioned above, even though belatedly, the petitioner had complied with the requirements of the proviso to Rule 164(2). Moreover, the purpose of Section 128A, is to enable the taxpayers to settle the disputes, by getting some relaxation on the interest and the penalty, subject to the compliance of the conditions therein. The records would indicate that, the petitioner had made all earnest efforts to fulfill the obligations, and hence, merely because of a small default on its part in submitting the necessary form to adjust the amount, that is already paid by the petitioner in time, the benefit of the Scheme need not be denied.
13. Thus, the facts and circumstance of this case, warrant a lenient approach in the matter, particularly since, the Scheme is intended for the benefit of the genuine taxpayers who are willing to comply with the conditions as per the Scheme. The petitioner had already demonstrated his bona fides by making the payment, and the only mistake was, not submitting the necessary form for appropriating the amount into the Electronic Liability Register. Therefore, some leniency can be shown.
Accordingly, this writ petition is disposed of by quashing Ext.P6, with a direction to the 1 st respondent or any other competent officer to treat the payment credited to the Electronic Cash Ledger on 31.03.2025, which is covered by FORM GST DRC-03A furnished by the petitioner on 30.06.2025, as the payment duly effected as per the settlement scheme and grant the benefit of Section 128A of the CGST Act to the petitioner. There shall be a further direction to the 1 st respondent to issue GST SPL-05 to the petitioner, if the amount already paid by the petitioner is sufficient.