Revocation of Approved Section 128A Tax Settlement Waiver via Form GST SPL-05 Is Impermissible and Quashed

Issue

Facts

• Period & Default: The case pertains to F.Y. 2018–19 and involved belated payment of tax and delayed filing of monthly returns / GSTR-3B by the petitioner.
• Initiation of Proceedings: Assessment proceedings were initiated against the petitioner solely under Section 73 of the CGST/TNGST Act for non-fraud demands.
• Discharge & Settlement: The petitioner fully discharged the primary tax liability and opted for a tax settlement waiver under Section 128A.
• Approval & Revocation: The designated authority accepted the settlement application and formally issued Form GST SPL-05. However, this approval was subsequently revoked, and the original SCN proposals were confirmed against the petitioner.
• Writ Challenge: Aggrieved by the revocation and confirmation of the demand, the petitioner filed a writ petition before the High Court.

Decision

• Validity of Section 128A Waiver (In Favour of Assessee): Since proceedings were confined strictly to Section 73 and the tax liability stood fully discharged, the settlement waiver granted under Section 128A via Form GST SPL-05 was legally valid and binding.
• Impermissibility of Revocation (In Favour of Assessee): Once Form GST SPL-05 is issued, revoking the approval via Section 161 or general powers is impermissible unless the specific statutory conditions under Rule 164(16) or (17) are satisfied.
• Quashing and Remand (In Favour of Assessee / Matter Remanded): The controversy stood covered in favor of the assessee; consequently, the impugned confirmation order was quashed, and the matter was remitted to the respondents to pass fresh orders in accordance with law.

Key Takeaways

• Finality of Section 128A Settlement: Issuance of Form GST SPL-05 granting a settlement waiver under Section 128A brings finality to eligible non-fraud tax disputes under Section 73, protecting taxpayers from arbitrary reopening.
• Restrictions on Rectification/Revocation Powers: General powers like Section 161 cannot be invoked to revoke settled tax waivers unless strict statutory exceptions specified under Rule 164(16) or (17) are explicitly triggered.