Madras High Court Directs Reconsideration Of Indian Bank's Maharashtra GST Waiver Claim

The Madras High Court on 31 July directed GST authorities to reconsider Indian Bank's application seeking waiver of interest and penalty in respect of its Maharashtra operations.

Justice Senthilkumar Ramamoorthy held that when a single order under Section 73 of the Central Goods and Services Tax Act, 2017 covers operations in multiple States, the proper officer cannot reject a waiver claim under Section 128A of the Act for one State on the ground of lack of jurisdiction if no other officer is designated to consider it. He observed:

“...Considering all these aspects, having issued the combined order under Section 73 in respect of both Chennai and Maharashtra locations, there is no statutory basis for the proper officer to decline to exercise jurisdiction in respect of waiver with regard to Maharashtra. Therefore, the impugned order is partly set aside only insofar as the rejection of the waiver claim pertaining to Maharashtra is concerned and the matter is remanded for re-consideration...”, the Court said.

The dispute arose from an Order-in-Original issued under Section 73 of the Central Goods and Services Tax Act, 2017 on 21 March 2023, covering Indian Bank's operations in Tamil Nadu and Maharashtra.

Indian Bank had initially challenged the Maharashtra portion of the order before the Commissioner (Appeals), Mumbai. However, the appeal was rejected on the ground that the appellate authority lacked jurisdiction and that the bank was required to pursue the matter before the authorities in Chennai.

The bank subsequently filed an application in Form GST SPL-02 seeking waiver of interest and penalty under Section 128A of the Central Goods and Services Tax Act. The authorities accepted the application insofar as the Tamil Nadu operations were concerned but declined to consider the Maharashtra component, stating that the officer was not competent to examine that claim.

Before the High Court, the bank contended that it had fulfilled all requirements for waiver and had filed the application before the same officer who had issued the original demand order. It argued that neither Section 128A nor Rule 164 of the Central Goods and Services Tax Rules restricted the officer's power to consider the waiver application.

The Revenue relied on CBIC Circular No. 238/32/2024-GST and submitted that the competent authority to decide such applications was the proper officer responsible for recovery proceedings under Section 79 of the Central Goods and Services Tax Act.

The Court noted that the circular and Rule 164 linked waiver applications to the proper officer under Section 79. However, it observed that neither Section 79 nor the GST Rules clearly identified a different officer for this purpose.

Further, the Bench noted that Rule 164 contemplated a single waiver application and that the original order under Section 73 had been issued as a combined order covering the bank's operations in Chennai and Maharashtra.

Accordingly, the High Court held that there was no statutory basis for the proper officer to refuse to examine the waiver claim relating to Maharashtra, set aside the rejection of that portion of the application and remanded the matter for fresh consideration after giving Indian Bank an opportunity of hearing.

For Petitioner: Shiva Kumar.G and B. Revathi, Advocates 

For Respondent: K.S. Ramasamy, Senior Standing Counsel