Facts of the Case:

The petitioner challenged an order rejecting its application for waiver under Section 128A of the applicable GST enactments. An Order-in-Original under Section 73 had been issued on 30.12.2022, pursuant to which the petitioner discharged the entire tax demand by making payments on 27.03.2023 and 06.09.2024. However, while making the payment, the petitioner inadvertently remitted a sum of ₹3,69,334 under the IGST head instead of the appropriate CGST and SGST heads.

Since the entire tax liability had been paid, the petitioner contended that the incorrect accounting head was merely a clerical error, particularly when it had no IGST liability. Nevertheless, the authorities rejected the waiver application solely on the ground that the payment had not been made under the correct tax heads.

Issue:

Whether the benefit of waiver under Section 128A of the GST enactments can be denied solely because the taxpayer discharged the entire tax liability under the wrong GST head (IGST instead of CGST and SGST), despite having made full payment within the prescribed time.

Held That:

The Court observed that Section 128A requires payment of the full amount of tax payable under the show cause notice or adjudication order, and this requirement stood fulfilled in the present case notwithstanding the fact that a portion of the payment was made under the wrong tax head. Referring to the Supreme Court’s decision in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company, the Court reiterated that while exemption or waiver provisions must be construed strictly with respect to substantive conditions, procedural requirements are satisfied by substantial compliance. 

Accordingly, the Court set aside the impugned order and remanded the matter to the adjudicating authority for fresh consideration of the waiver application after granting the petitioner an opportunity of hearing. The Court also directed the petitioner to comply with any procedural requirements necessary for transferring or accounting the tax under the appropriate GST head.

The High Court held that the petitioner had substantially complied with the substantive requirements of Section 128A by discharging the entire tax liability within the prescribed time pursuant to the order passed under Section 73.

Case Name: Ayiswarya Polymers v. Assistant commissioner of GST and Central Excise dated 25.06.2026

To read the complete Judgement 2026 Taxo.online 1847