Facts of the Case

The petitioner faced a Section 73 assessment for tax periods July 2017 to March 2018, culminating in an order dated 16.02.2022 raising a demand of Rs.3,97,356/- towards tax, interest and penalty. Due to a system entry error, the Electronic Liability Ledger reflected the "tax" component as "0" even though the assessment order clearly showed tax of Rs.2,30,358/-, interest of Rs.1,43,962/- and penalty of Rs.23,036/-. Relying on the ledger's zero-tax entry, the petitioner applied in Form GST SPL-01 under Section 128A of the GST Act for waiver of interest and penalty. The State Tax Officer issued a clarificatory notice in Form GST SPL-03 pointing out the ledger error and, since the actual tax had not been deposited, rejected the waiver application vide order in Form GST SPL-07 dated 09.06.2025. A subsequent rectification petition under Section 161 was also rejected on 10.06.2025.

Issues Involved

  1. Whether a Section 128A waiver application can be rejected for non-deposit of tax where the Electronic Liability Ledger itself (erroneously) reflects no tax liability.
  2. What relief is appropriate once the Department admits the ledger discrepancy was a system/data-entry error rather than the petitioner's fault.

Petitioner's Arguments

  • The Electronic Liability Ledger showed the tax component as "0", so there was no basis on which to reject the waiver application for non-payment of tax.
  • The Department itself admitted the error in the Form GST SPL-03 notice; the Section 161 rectification petition should therefore have been allowed.

Respondent's Arguments

  • There was no error in the underlying demand — the assessment order under Section 73 clearly and lucidly depicted the tax, interest and penalty components; the petitioner, having received the reasoned assessment order, could not rely on a subsequent ledger glitch to avoid discharging the tax precondition for waiver under Section 128A.

Court Order / Findings

  • At the hearing, the petitioner's counsel conceded that the tax component was indeed reflected in the summary sheet of the assessment order and expressed willingness to deposit the tax to avail Section 128A benefit; the Department's counsel agreed the waiver application would then be reconsidered.
  • The Court set aside both the Form GST SPL-07 order dated 09.06.2025 and the Section 161 rejection dated 10.06.2025, and directed the petitioner to deposit the assessed tax within a week.
  • Upon such deposit, the Additional CT & GST Officer was directed to consider the Section 128A waiver application afresh on its own merits; failing deposit, the original rejection orders would stand revived and the Department would be at liberty to proceed in accordance with law.

Important Clarification

  • The precondition of depositing the full assessed tax amount is mandatory for availing the interest-and-penalty waiver under Section 128A; a data-entry discrepancy in the Electronic Liability Ledger does not excuse this requirement once the reasoned assessment order itself clearly quantifies the tax due.
  • Courts may nonetheless grant a short window for compliance where the petitioner concedes the position and expresses readiness to deposit, rather than shutting out the waiver claim outright.

Sections Involved

  • Section 73, GST Act, 2017 — assessment order raising tax, interest and penalty.
  • Section 128A, GST Act, 2017 — conditional waiver of interest and penalty for specified periods, subject to payment of tax.
  • Section 161, GST Act, 2017 — rectification of errors apparent on the face of the record.

Decision – In Favour of

Disposed of with directions, conditionally in favour of the Assessee — relief under Section 128A remains available subject to the petitioner depositing the assessed tax within the stipulated time.

Case Details

Court: High Court of Orissa at Cuttack
Case No.: W.P.(C) No. 17606 of 2025
Coram: Hon'ble the Chief Justice Harish Tandon and Hon'ble Mr. Justice Murahari Sri Raman
Date of Order: 16th July, 2025

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