Circular Cannot Narrow Section 128A: Madras High Court Allows Amnesty on Self-Assessed Tax

The Madras High Court has held that Circular No. 238/32/2024-GST cannot cut down the scope of Section 128A, and that a demand is not pushed outside the amnesty merely because the underlying tax was self-assessed. Order reported as dated 28 July 2026.

Section 128A of the CGST Act waives interest and penalty on demands raised under Section 73 for the July 2017 to March 2020 periods, provided the tax itself is paid within the prescribed window. How far that waiver reaches has been contested since CBIC issued Circular No. 238/32/2024-GST on 15 October 2024, which told officers the waiver does not extend to interest demanded on delayed filing of returns or delayed reporting of a supply, on the reasoning that such interest arises on self-assessed liability.

In an order reported as dated 28 July 2026, the Madras High Court held that the circular could not curtail or restrict the scope of a statutory provision. A demand does not fall outside Section 128A merely because the underlying tax was self-assessed; the conditions written into the section are what govern. The Court also held that a waiver already granted can be treated as void only in the circumstances the rules themselves specify, so an authority cannot declare a waiver void on some other ground.

The statutory conditions still bite. The application must be filed in time and the tax paid within the prescribed period. The judgment relaxes the circular's gloss, not the section.

What this means for you: if a Section 128A application was rejected because the demand involved self-assessed tax, that rejection is now open to challenge. Pull the rejection order and check your limitation before acting.

Read the circular at https://cbic-gst.gov.in/pdf/circular-238-32-2024-GST.pdf and Madras High Court judgments at https://www.mhc.tn.gov.in/judis/

Topics:section 128AGST amnestycircular 238/32/2024self-assessed taxwaiver of interest and penaltysection 73 demandMadras High Court GSTGST amnesty rejectionChennai GSTTamil Nadu GST

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