The Orissa High Court in the case of SAMITA PANDA VERSUS THE COMMISSIONER OF CT & GST AND ANOTHER vide W. P. (C) No. 17606 of 2025 dated 16.07.2025, reiterated the principle that technical or procedural lapses, especially arising from system errors, should not defeat substantive justice. Section 128A must be applied fairly, considering the taxpayer’s bona fide conduct. Also, clarifies that portal errors should not prejudice taxpayers, especially when rectification is sought in good faith. The rejection of the application under Section 128A on the sole ground of non-deposit of tax was not sustainable in law, since the error in portal entries was not attributable to the taxpayer.
Facts of the case: In this case, the petitioner was issued a demand under Section 73 of the Act for the financial year 2017–18, involving tax, interest, and penalty totaling ₹3,97,356. However, when the petitioner accessed the Electronic Liability Ledger (ELL) on the GST portal, it showed no tax dues. The petitioner did not deposit the amount, believing that no demand was pending.
Later, the department issued a Form GST SPL-03, admitting that the demand was wrongly reflected as “nil” in the ELL due to a system-generated error and that the petitioner had not deposited the tax due to this system glitch.
The petitioner filed an application under Section 128A of the OGST/CGST Act seeking waiver of interest and penalty, citing the genuine portal issue and the fact that there was no mala fide intent or tax evasion. The GST authorities rejected the application solely on the ground that tax had not been deposited, a precondition under Section 128A.
The petitioner then filed an application under Section 161 (rectification of errors apparent on record), which was also rejected.
Issue:
Whether the rejection of the waiver of interest and penalty under Section 128A of the OGST/CGST Act is valid when the non-payment of tax arose due to a portal/system error not attributable to the assessee?
Held that: The Court held as under:
The rejection of the waiver application under Section 128A was unsustainable in law since the non-payment of tax was not deliberate but resulted from an admitted system error in the GST portal. The taxpayer was not at fault; the department itself had issued a Form SPL-03 acknowledging the systemic glitch.
The condition precedent of depositing tax before filing a waiver application under Section 128A must be interpreted reasonably, especially where the error is attributable to the department’s portal and not to the taxpayer. Since the tax liability was never disputed, and the taxpayer showed readiness to comply once the error was discovered, the waiver could not have been mechanically rejected.
The orders rejecting both the waiver application under Section 128A and the rectification application under Section 161 were quashed.
The Court directed the petitioner to deposit the tax within 7 days, after which the department must reconsider the waiver application on its merits, without being influenced by the previous rejection.
Conclusion
This landmark judgment by the Orissa High Court reinforces the importance of fair interpretation in GST compliance. Honest taxpayers facing portal errors should not suffer unjust penalties. If you’ve faced similar issues or need expert help with GST disputes, consult IndTax Filings today.
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