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Yes, on the specific facts in Sri Annamar Agencies v. State Tax Officer (FAC), the Madras High Court treated the failure to file Form GST DRC-03A as a procedural lapse that could be cured. That was conditional: the officer must verify that the tax-equivalent amount paid through DRC-03 remained available and had not been used for another liability. The Court quashed the rejection and ordered a fresh examination; it did not itself grant the Section 128A waiver.
What the Madras High Court decided
In Sri Annamar Agencies v. State Tax Officer (FAC), the petitioner had paid an amount equal to the disputed tax through Form GST DRC-03 but had not filed DRC-03A to adjust that payment against the demand. The Section 128A application was rejected for that omission. The Madras High Court set aside the rejection and remitted the matter to the tax officer for verification and a fresh decision on the merits. TaxGuru’s report and reproduced judgment identify the case as W.P.(MD) No. 26152 of 2026, decided on 15 September 2026 by Justice C. Saravanan.
The judgment’s reproduced wording says the failure to file DRC-03A is procedural “provided the aforesaid amount has not been debited towards any other tax liability subsequently.” The condition matters: this is not a ruling that an earlier DRC-03 payment automatically satisfies Rule 164 or that every missing DRC-03A can be cured.
Why the payment’s availability matters
The petitioner had received an adverse order under Section 73 for tax period 2018–19, dated 22 April 2024, and debited the tax-equivalent amount through DRC-03 on 1 June 2024. The petitioner applied for Section 128A relief on 5 March 2025. The application was rejected in Form GST SPL-07 on 15 September 2025 because DRC-03A had not been generated.
The Court directed the officer to examine whether the amount equivalent to the tax debited on 1 June 2024 remained in the petitioner’s Electronic Credit Ledger through the date of the impugned order. If the amount remained available, the Court said a post-facto DRC-03A filing could be permitted. The officer must still determine eligibility and decide the application on its merits.
How DRC-03A fits into a Section 128A application
Section 128A provides a conditional route to waiver of interest, penalty, or both for eligible demands. Rule 164 prescribes the procedure for closure of proceedings under that section. The required form depends on whether the matter is at the notice or statement stage, or is covered by an order:
| Procedural stage | Rule 164 route | Relevant forms |
|---|---|---|
| Notice or statement | Rule 164(1) addresses payment details for the notice or statement route. | SPL-01 and DRC-03 |
| Covered order; payment against the order was made using DRC-03 | Rule 164(2) requires DRC-03A to adjust the payment against the relevant demand in the Electronic Liability Register before applying. | DRC-03A, then SPL-02 |
Thus, the decision addresses the consequence of missing a prescribed adjustment step where the underlying payment had already been made and its continued availability could be checked. It does not make DRC-03A optional in cases covered by Rule 164(2). See the CGST Rules and CBIC Circular No. 238/32/2024-GST.
The CBIC circular explains that a DRC-03 payment made against an order is to be adjusted against the demand in the Electronic Liability Register using DRC-03A. For deciding the date of full tax payment, it says the date the amount was paid through DRC-03 may be considered, rather than the later date when the DRC-03A adjustment is made.
What the Court ordered the parties to do
The remand sets out a next step for the taxpayer and a timeline for the officer:
- The petitioner may file a reply in Form GST SPL-04 to the Form GST SPL-03 notice dated 11 June 2025 within 30 days of receiving the Court’s order.
- If the petitioner files that reply, the officer must provide due notice and pass a fresh order on the merits and in accordance with law.
- The fresh order should preferably be passed within three months after the officer receives the reply.
Those are directions in this case, not a general deadline applicable to every Section 128A application.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What taxpayers can take from the ruling
- A prior payment is not the same as completing the prescribed adjustment. Rule 164(2) still specifies DRC-03A in the covered order-stage circumstances.
- Availability of the funds is central to this decision. The Court’s procedural-lapse analysis was tied to whether the DRC-03 amount remained unutilized for another liability.
- The waiver application remains subject to eligibility review. Quashing the rejection did not establish that the petitioner qualified for relief or direct that the waiver be granted.
- Apply the ruling narrowly. It does not resolve cases where the DRC-03 amount was applied elsewhere or where another Section 128A condition is not met.
The case text discussed above is reproduced by TaxGuru, a secondary publisher; the cited report does not establish that the wording was independently checked against an official court-hosted copy. GST procedures and forms can change, so taxpayers should check the current official rules and forms before acting.
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