Section 128A amnesty cannot be denied merely because DRC-03A was filed late when tax was paid into cash ledger in time: Kerala High Court

A small default in appropriating an amount already paid within the deadline should not defeat a scheme meant for genuine taxpayers, the Court said.

The Kerala High Court has held that a taxpayer who deposited the full tax in the Electronic Cash Ledger before the March 31, 2025 deadline is entitled to the waiver of interest and penalty under Section 128A of the CGST Act, even though FORM GST DRC-03A for appropriating the amount was filed about three months late [Baama Ventures v. State Tax Officer, Thrissur and Others].

Justice Ziyad Rahman A.A. quashed the order rejecting the petitioner's amnesty application and directed that the payment be treated as duly made under the scheme.

The petitioner had suffered an assessment order for 2018-19 and applied for the benefit of Section 128A. It credited the entire amount to the Electronic Cash Ledger on March 31, 2025, but omitted to file DRC-03A to appropriate it to the Electronic Liability Register, as required under Rule 164. On noticing the omission, it filed the form on June 30, 2025.

The proper officer issued a show cause notice on October 30, 2025 and rejected the application on the ground that DRC-03A had not been filed by the last date.

The petitioner relied on the proviso to Rule 88B(1), under which an amount lying in the cash ledger before the due date is excluded while computing interest, to argue that the date of credit to the cash ledger should be treated as the date of payment.

The State countered with the proviso to Rule 164(2), which requires payment under the scheme to be made only by crediting the Electronic Liability Register, and argued that a deposit in the cash ledger was not sufficient.

The Court held that although Rule 88B could not be applied straightaway, the purpose behind it was relevant, since it shows that "some sanctity is attached to the date on which, the amount is credited in the Electronic Cash Ledger."

Noting that the deposit within the statutory period was undisputed and that the requirement of Rule 164(2) had been complied with, though belatedly, the Court found the petitioner's bona fides evident.

"Merely because of a small default on its part in submitting the necessary form to adjust the amount, that is already paid by the petitioner in time, the benefit of the Scheme need not be denied," the Court held, adding that the scheme is intended for genuine taxpayers willing to comply with its conditions.

The officer was directed to grant the benefit of Section 128A and to issue FORM GST SPL-05 if the amount already paid is sufficient.

The ruling will be relevant to the many applicants who paid within time but tripped on the DRC-03A appropriation step.

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