Ayiswarya Polymers v. Assistant commissioner of GST and Central Excise

Introduction

• The petitioner was issued an Order-in-Original under Section 73 on 30.12.2022.
• Pursuant to the order, the petitioner discharged the entire tax liability by making payments on 27.03.2023 and 06.09.2024.
• While making one of the payments, the petitioner inadvertently paid ₹3,69,334 under the IGST head instead of the CGST and SGST heads, despite having no IGST liability.
• Subsequently, the petitioner applied for waiver of interest and penalty under Section 128A.
• The department rejected the application solely because part of the tax had been paid under the wrong tax head.

Issue

Whether the benefit of waiver under Section 128A can be denied merely because the taxpayer deposited the tax under the wrong GST head (IGST instead of CGST and SGST), even though the entire tax liability was discharged within the prescribed time?

Petitioner’s Contentions

• The entire tax liability determined under Section 73 had been paid within the prescribed period.
• Payment under the IGST head was an inadvertent clerical mistake.
• The mistake was purely procedural since there was no IGST liability and no loss of revenue.
• A technical accounting error should not defeat the statutory benefit available under Section 128A.

Department’s Contentions

• The petitioner failed to make payment under the correct tax heads as required.
• Since the tax was not discharged under the appropriate heads of CGST and SGST, the conditions for granting waiver under Section 128A were not satisfied.
• Therefore, the waiver application was rightly rejected.

High Court’s Findings

The Court observed that: