The High Court of Gujarat has quashed the order of the competent authority which rejected an application for a waiver of interest and penalty under Section 128A of the Central Goods and Services Tax Act, 2017 . The ruling provides relief to R.J. Technologies, a partnership firm, by confirming that tax authorities cannot disregard adjustments successfully reflected in the Electronic Liability Register on the official Goods and Services Tax portal, even when the taxpayer has made inadvertent clerical errors in original submissions.

The division bench, comprising Justice A. S. Supehia and Justice Vaibhavi D. Nanavati, held that the authority’s decision to reject the firm’s plea for amnesty under the newly introduced Section 128A was reached without proper application of mind . The Court has directed the department to process the firm's application in Form GST SPL-02 within twelve weeks.

Rectification of Clerical Errors in Tax Filings

The legal dispute stemmed from an inadvertent error made by the petitioner during the filing of Form GST DRC-03 on October 4, 2019 . While the firm intended to reverse an Input Tax Credit balance for the Financial Year 2017-18 to address a mismatch between its GSTR-2A and GSTR-3B filings, it erroneously recorded the Financial Year 2018-19 in the payment form. Despite the firm explaining that this was a clerical error and providing subsequent payments to address outstanding discrepancies for the 2017-18 period, the adjudicating authority issued an order on November 30, 2023 , confirming a tax demand and refusing to credit the amount paid in 2019.

Following the enactment of the Finance (No. 2) Act, 2024 , Section 128A was introduced to offer a comprehensive amnesty for tax demands pertaining to the initial years of the GST regime. The legislation aimed to reduce persistent litigation by allowing taxpayers to waive interest and penalties, provided they satisfied the principal tax liability . To resolve technical bottlenecks, the government also introduced Rule 142(2B) of the Central Goods and Services Tax Rules, 2017 , which permitted taxpayers to file Form GST DRC-03A to adjust payments made through the earlier DRC-03 mechanism against specific demand orders.

Exercising this new provision, the firm filed two applications in Form GST DRC-03A on January 18, 2025 . These filings effectively adjusted the previously contested payments against the demand for the 2017-18 financial year. Upon acceptance of these forms on the digital portal, the firm’s outstanding principal tax liability was updated to zero. Despite this digital adjustment being formalized, the competent authority rejected the firm's application for amnesty , arguing that the original payment date of 2019 could not be considered valid for the 2017-18 assessment .

Mandatory Recognition of Portal Adjustments

The High Court scrutinized the authority's refusal, noting that the rejection ignored the clear statutory mandate and the operational mechanics of the electronic filing system. Justice Supehia, writing for the bench, emphasized that the authorities are bound by the Electronic Liability Register maintained under Section 49(7) of the CGST Act . The bench noted that once a digital adjustment is accepted on the portal, it acts as a formal record of satisfied liability.

“Upon an overall consideration of the facts and the applicable statutory provisions, we are of the opinion that respondent No.4 has failed to properly appreciate the material facts and the effect of the adjustment effected through Forms GST DRC-03A, which had been accepted on the GST portal,” the Court stated in its judgment.

The Court further observed that the rejection failed to align with the legislative intent behind the amnesty scheme. The policy was specifically designed to provide relief to taxpayers who acted in good faith to resolve discrepancies arising from the early implementation phase of the GST regime. By ignoring the successful adjustment of the principal tax amount, the authority’s decision acted as a hurdle to the very purpose of the statute.

The Court highlighted that the petitioner had provided sufficient evidence—including annual returns for subsequent years—to prove that no other liabilities remained outstanding for the years mistakenly cited in the earlier DRC-03 filings. “The impugned order dated 02.07.2025 , rejecting the petitioner’s application in Form GST SPL-02 dated 25.03.2025 under Section 128A of the CGST Act , has, therefore, been passed without proper application of mind ,” the bench recorded.

The bench concluded that the firm’s compliance with the statutory conditions, bolstered by the automated adjustments reflected on the GST portal, entitled it to the benefits of the amnesty scheme. Consequently, the Court set aside the rejection order and issued a clear directive for the authority to process the application. The bench added a further safeguard for the petitioner: should the portal's automated interface prevent the immediate processing of the amnesty application, the authorities are explicitly required to accept a physical copy of the application and process it in accordance with law.

This judgment reinforces the principle that revenue authorities must treat digital portal records—specifically those involving the Electronic Liability Register and adjustments through DRC-03A—as binding evidence of tax discharge. The decision underscores that technical irregularities, such as selecting the wrong financial year in a web form, should not be used as a ground to deny substantive relief when the actual payment has been received and properly reconciled in the official system. The case now returns to the competent authority , which has been granted a strict twelve-week window to finalize the waiver of interest and penalty for the firm.