Can a “Deemed Approved” order be revoked by issuing a “void” order if the taxpayer has not paid the basic tax component under Waiver Scheme under Section 128A of GST Act?
Core Problem: GST Amnesty Scheme (Waiver Scheme) applications (SPL-02) being filed without payment of the basic tax. If the proper officer doesn’t reject these (via SPL-03, then SPL-07) within the prescribed time, the application might be “deemed approved,” leading to unintended waiver of interest and penalty. The specific question is: Can such a “deemed approved” order be revoked by issuing a “void” order because the fundamental condition (payment of basic tax) was never met?
Based strictly on the “void” conditions explicitly mentioned in Circular No. 238/32/2024-GST (referring to Rule 164(16) and Rule 164(17)):
- The specific conditions for an order becoming “void” relate to the non-payment of additional tax arising from departmental appeals (Rule 164(16)) or non-payment of specified other interest/penalty dues that were quantified in the SPL-05/06 order itself (Rule 164(17)).
- The circular does not explicitly state that a deemed approved SPL-05 becomes “void” under these specific sub-rules (16 or 17 of Rule 164) if the initial, fundamental condition of payment of the basic tax demanded (as per Para 3.2.6) was never met before filing the application.
However, this does NOT mean the department is without recourse.
Fundamentally Invalid Application: As per Para 3.2.6, the application itself is only valid if filed after payment of the full tax demanded. An application filed without meeting this condition precedent is, arguably, ab initio (from the beginning) invalid or not maintainable.
Deemed Approval of an Invalid Application: If an invalid application is “deemed approved” due to procedural lapse (officer not acting in time), the approval itself rests on a faulty premise. The principle is that a statutory benefit cannot be claimed if the foundational conditions for eligibility are not met.
Legal Recourse Beyond Specific “Void” Clauses:
- The department would likely need to argue that the deemed approval is erroneous and not legally sustainable because the taxpayer failed to meet the primary eligibility criterion (payment of tax) for the amnesty scheme.
- The mechanism to nullify such a deemed approval might not be a “void order” under Rule 164(16) or (17) for this specific reason (non-payment of initial basic tax).
- Instead, it might involve:
- Review or Rectification: If the deemed approval can be considered an error apparent on the record (the record being the SPL-02 which lacks proof of tax payment, which is a mandatory prerequisite).
- Powers of Revision: The Commissioner may have powers under the GST Act to revise orders that are erroneous and prejudicial to the interest of revenue. A deemed approval granted to an ineligible person would certainly be prejudicial.
- Issuing a Speaking Order: Even in case of deemed approval, the proper officer (or a higher authority) might need to issue a subsequent speaking order clarifying why the taxpayer is not eligible for the waiver due to non-fulfillment of the primary condition of tax payment, thereby rendering the deemed approval ineffective or liable to be set aside.
- The term “void” implies automatic nullification once a certain condition (like non-payment of additional tax under Rule 164(16)) is met. For non-payment of the initial basic tax, the argument is that the eligibility for the scheme itself was never established.
Conclusion:
The fact that the taxpayer has not paid the basic tax component is a fundamental flaw. While the specific “void” conditions in Rule 164(16) and (17) (as detailed in the circular) target non-payment of subsequent liabilities or other specified dues, the non-payment of the initial basic tax makes the application itself ineligible from the outset as per Para 3.2.6 of the circular.
A “deemed approval” of such a fundamentally flawed application is highly problematic. While it may not be “void” under the exact letter of Rule 164(16) or (17) for this specific reason, the department should have strong grounds to challenge and nullify such a deemed approval because the taxpayer never met the threshold eligibility criteria for the amnesty. The most critical action is to ensure SPL-03 is issued within the timeline to prevent such a situation. If deemed approval occurs, the department should explore legal options like review, revision, or issuing a specific order to declare the ineligibility and the non-applicability of the deemed waiver, based on the foundational requirement of tax payment being unmet
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