Madras HC on Section 128A Waiver: DRC-03A Omission Held Procedural, Matter Remanded

The Madras High Court in Sri Annamar Agencies Vs State Tax Officer (FAC) examined whether an assessee’s failure to file Form GST DRC-03A could, by itself, justify outright rejection of an application under Section 128A of the GST enactments. The Court concluded that such non-filing is only a procedural defect, subject to verification that the tax amount debited earlier has not been used for any other liability, and remanded the matter for fresh consideration.

The decision clarifies the interaction between Section 128A, Rule 164, and Rule 142(2B) of the GST Rules, 2017, particularly in the context of closure of proceedings and waiver of interest/penalty arising from demands under Section 73.

Background of the Writ Petition

Parties and Proceedings

  • Case Name: Sri Annamar Agencies Vs State Tax Officer (FAC) (Madras High Court)
  • Appeal Number: WP(MD) No. 26152 of 2026
  • Court: Madras High Court
  • Date of Order: 15/09/2026

The assessee approached the High Court challenging an order issued in Form GST SPL-07 dated 15.09.2025 (bearing Reference No. ZD330925174656W). Through this order, the authority rejected the assessee’s application under Section 128A on the ground that Form GST DRC-03A had not been generated.

The writ petition was taken up for final disposal at the admission stage itself, with both sides consenting to such course of action.

Core Controversy

The central issue before the Court was:

Whether the omission to file Form GST DRC-03A, as contemplated under Rule 142(2B) read with Rule 164 of the GST Rules, 2017, is fatal to an application under Section 128A, or whether such lapse is merely procedural and capable of being rectified post facto.

Chronology of Relevant Events

The facts, as recorded in the order, can be sequenced as follows:

  1. The assessee faced an adverse order under Section 73 of the respective GST enactments for the tax period 2018-19, dated 22.04.2024.
  2. With the intention of availing the benefit of waiver of interest/penalty under Section 128A, the assessee filed an application on 05.03.2025.
  3. Prior to filing the Section 128A application, the assessee had already debited an amount equivalent to the tax liability on 01.06.2024 through Form GST DRC-03.
  4. However, the assessee did not subsequently link this payment with the specific demand/order by filing Form GST DRC-03A.
  5. The assessing authority, relying on the requirements under Rule 164(1) and Rule 164(2) of the GST Rules, 2017, rejected the assessee’s waiver application in Form GST SPL-07, solely for want of Form GST DRC-03A.

This rejection prompted the assessee to invoke writ jurisdiction under Article 226 of the Constitution of India.

Statutory Framework Considered

Section 128A – Waiver of Interest and Penalty

Section 128A of the GST enactments provides the legislative basis for waiver of interest, penalty, or both in respect of certain demands raised under Section 73. The manner in which this section is to be given effect procedurally is laid down in Rule 164 of the GST Rules, 2017.

Rule 164 – Closure of Proceedings Under Section 128A

The High Court reproduced and relied on Rule 164(1) and Rule 164(2) of the GST Rules, 2017, which prescribe the procedure and conditions for closure of proceedings under Section 128A: