Section 128A Waiver Is Only for Accepted GST Dues, Not Disputed Demands: Madras High Court

The Madras High Court has held that the Section 128A waiver is meant for taxpayers who accept the tax and seek relief only from interest and penalty. Where the demand itself is disputed, the correct remedy is an appeal under Section 107.

A 100% export-oriented unit in Tamil Nadu applied for waiver of interest and penalty under Section 128A of the TNGST Act, 2017. The application arose from an April 2024 order under Section 73 seeking recovery of a refund the department said was wrongly granted. The unit did not reply to the SPL-03 show cause notice issued in September 2025, and its application was rejected in November 2025.

Before the Madras High Court, the unit argued that it owed no GST at all on its exports and that the refund had been correctly sanctioned. The Court did not go into that question. It held that Section 128A is built for a taxpayer who accepts the tax and asks only that interest and penalty be waived. Where the taxpayer disputes the demand itself, the amnesty route is the wrong door. The correct remedy is an appeal under Section 107 against the assessment order.

The Court gave the unit 30 days to file that appeal, directed the Appellate Authority to entertain it without rejecting it on limitation, and stayed recovery in the meantime.

What this means for you: before applying under Section 128A, decide whether you are conceding the tax. If you intend to argue that the demand is wrong in law, file the Section 107 appeal within time. An SPL-02 application does not preserve your right to contest the demand, and the appeal clock keeps running while the waiver application sits pending.

Read the bare provisions on the CBIC portal: Section 128A at https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/acts/2017_CGST_act/active/chapter21/section128a_v1.00.html and Section 107 at https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/acts/2017_CGST_act/active/chapter18/section107_v1.00.html. The order copy can be searched on the Madras High Court judgment portal at https://www.mhc.tn.gov.in/judis/.

Topics:Section 128A GSTGST amnesty schemeMadras High Court GSTSection 107 appealGST interest penalty waiverSPL-02SPL-03TNGSTGST demand appealGST refund recoveryGST case law 2026Chennai GST

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