GST Amnesty Application Time Limit Mandatory, Ex Parte Order

GST Amnesty Application Time Limit Mandatory, Ex Parte Order Remanded for Fresh Reconsideration

Issue

Whether the time limit prescribed under Rule 164 for filing an application seeking waiver of interest and penalty under Section 128A is mandatory or directory, and whether an ex parte tax demand order can be set aside to grant an assessee another opportunity of hearing when the tax liability stands fully discharged.

Facts

The petitioner challenged an ex parte original order creating a GST tax demand, alongside a subsequent order rejecting its rectification application.
The dispute pertained to the claim for waiver of interest and penalty under the GST amnesty scheme under Section 128A.
The petitioner had discharged the entire principal tax liability before the notified due date.
The petitioner contended that the prescribed time limit for lodging the amnesty application was directory rather than mandatory, or alternatively sought a fresh opportunity to present its case.

Decision

The statutory requirement under Section 128A and Rule 164 is time-bound, and the prescribed time limit for filing the amnesty application is an essential, mandatory condition [Paras 6 & 7].
The argument that the time limit for filing the application is merely directory was rejected [Para 6].
Since the principal tax liability was fully paid and the Revenue’s financial interest was protected, the interest of justice warranted granting the petitioner another opportunity [Para 7].
The ex parte order was set aside, and the matter was remanded to the authority for fresh reconsideration after providing a reasonable opportunity of hearing [Para 7].

Key Takeaways

Mandatory Amnesty Timelines: Procedural time limits and filing conditions prescribed for claiming interest/penalty waivers under GST amnesty schemes (Section 128A) are strict and mandatory.
Remand Upon Full Tax Payment: Where the underlying tax has been completely discharged and no revenue loss occurs, courts may exercise equitable jurisdiction to remand ex parte orders for a fresh hearing.
Interpretation of Statutory Conditions: The phrase “subject to such conditions as may be prescribed” in tax waiver provisions enforces strict compliance with all procedural rules laid down under Rule 164.

HIGH COURT OF MADRAS

Tvl Karthikeya Authentic Andhra Restaurant

Assistant Commissioner (ST)^*

Senthilkumar Ramamoorthy, J.

WP No. 31773 of 2026
WMP. Nos. 34932 & 34933 of 2026

AUGUST 19, 2026

Ms. G. Vardini Karthik for the Petitioner. I. Dinesh, Addl. Govt Pleader (Tax) for the Respondent.

ORDER

1. An order dated 30.08.2024 and order rejecting the rectification petition are challenged in this writ petition.

2. Learned counsel for the petitioner submits that the petitioner discharged the tax demand under the impugned order on 19.10.2024, which is prior to the notified due date under Section 128A. She also submits that the petitioner had referred to the amnesty scheme in course of rectification proceedings. According to learned counsel, this tantamounts to substantial compliance with the requirements of Section 128A.

3. Relying on the judgment of the Supreme Court in Government of Kerala v. Mother Superior Adoration Convent [2021] 376 ELT 242 (SC), learned counsel submits that the Supreme Court noticed that the judgment in Commissioner of Customs (Import) v. Dilip Kumar & Company 361 ELT 577/69 GST 239 (SC)/(2018) 9 SCC 1 did not take note of the line of authorities that had drawn a distinction between exemption provisions, in general, and exemption provisions which have a beneficial purpose. Adverting to the language of sub-section (1) of Section 128A, learned counsel submits that the conditions prescribed in Rule 164 are intended to be directory and not mandatory and that this is reflected in the fact that the phrase “subject to such conditions as may be prescribed” is separated from the rest of the sub-section by a comma. In support of this contention, the judgment of the Supreme Court in Sama Alana Abdulla v. State of Gujarat (1996) 1 SCC 427, particularly paragraph 7 thereof is relied on.

4. Without prejudice to the above contentions, learned counsel submits that the petitioner be given another opportunity in view of the fact that the original order was issued ex parte and the entire tax demand was discharged.

5. Mr. I. Dinesh, learned Additional Government Pleader (Tax), accepts notice on behalf of the first respondent.

6. Section 128A(1) sets out the three circumstances in which an application for waiver may be filed. Thereafter, it is stipulated therein that if the full amount of tax payable as per clauses (a) to (c) are paid before the date notified, no interest under Section 50 or penalty under applicable GST statutes shall be payable and that proceedings shall be concluded subject to such conditions as may be prescribed. The phrase “subject to such conditions as may be prescribed” is intended to be qualificatory and, therefore, such phrase is separated by a comma. Merely on the basis that the qualificatory phrase is separated from the rest of the sub-section by a comma, it cannot be concluded that the prescribed conditions are directory and not mandatory. In order to decide whether the prescribed requirements are directory or mandatory, it became necessary to engage with the prescribed requirements. Such conditions are prescribed in Rule 164. In a batch of cases, Incompressible Fluid Control System v. Asstt. Commissioner (Madras)/2026 : MHC : 3296, after examining Rule 164, I concluded that the amnesty scheme is time bound with provision for deemed approval and that the time limits either run from the date of filing of the application for waiver or are closely linked thereto. On that basis, I concluded that the time limit for lodging an amnesty application is an essential requirement. In that context, the judgment of the Supreme Court in CCE v. Hari Chand Shri Gopal [2005] 188 ELT 353 (SC)/(2011) 1 SCC 236, with regard to the distinction between essential and procedural requirements was relied on.

7. Considering the aforesaid, I am unable to accept the contention that the condition prescribed in Rule 164(6) is directory and not mandatory. Nonetheless, it is noticeable that the tax demand under the ex parte original order was fully discharged. Considering this aspect, revenue interest stands protected and the interest of justice warrants another opportunity to the petitioner. Towards that end, the impugned original order is set aside and the matter is remanded to the first respondent for re-consideration. After providing a reasonable opportunity to the petitioner, a fresh order shall be issued within five months from the date of receipt of a copy of this order.

8. The writ petition is disposed of on the above terms. Consequently, connected miscellaneous petitions are closed. There shall be no order as to costs.