Facts of the Case:
In this case the petitioner, a 100% Export Oriented Unit (EOU), challenged the order dated 20.11.2025 whereby its application filed under Section 128A of the Tamil Nadu GST Act, 2017 was rejected. The application had been rejected due to the petitioner’s failure to respond to a Show Cause Notice issued in Form GST SPL-03 dated 18.09.2025.
The petitioner contended that it was not liable to pay GST on the exports undertaken by it and that the refund earlier granted was validly sanctioned. Subsequently, however, an assessment order dated 30.04.2024 was passed under Section 73 of the GST Act seeking recovery of the refunded amount. The petitioner further submitted that the disputed tax and part of the interest liability had already been recovered by the department.
The department argued that the petitioner had failed to respond to the statutory notice issued in Form SPL-03 and therefore the rejection of the application under Section 128A was justified.
Issue:
Whether a taxpayer disputing the very legality and sustainability of a tax demand can seek relief under Section 128A of the GST Act, or whether such challenge must be pursued through the statutory appellate mechanism under Section 107 of the Act.
Held That:
The Court held that the petitioner had wrongly invoked the provisions of Section 128A of the TNGST Act. The benefit available under Section 128A is intended for cases where tax liability is accepted and only the waiver of interest and penalty is sought in accordance with the statutory scheme and notifications issued thereunder.
The Court observed that where a taxpayer disputes the very basis of the demand and asserts that no tax is payable at all, the proper remedy is to challenge the assessment order before the Appellate Authority under Section 107 of the GST Act. Since the petitioner was questioning the legality of the demand itself and not merely seeking waiver-related benefits, recourse to Section 128A was inappropriate.
Taking note of the fact that the disputed tax amount had already been recovered from the Electronic Credit Ledger, the Court granted liberty to the petitioner to file an appeal against the assessment order dated 30.04.2024 within 30 days. The Appellate Authority was directed to entertain and decide the appeal on merits without rejecting it on the ground of limitation.
The Court further directed that all further recovery proceedings shall remain in abeyance pending disposal of the appeal, provided the appeal is filed within the prescribed period granted by the Court. In the event of failure to file the appeal within the stipulated period, the department would be free to initiate recovery proceedings under Section 79 of the GST enactments.
Case Name: M. TEX INTERNATIONAL v. THE STATE TAX OFFICER dated 20.07.2026
Citation No. 2026 Taxo.online 2215
