Withdrawing an appeal to access the waiver: the sequencing risk

Withdraw too early and you have no appeal and no waiver. The order of steps is the whole decision.

Anandaday Misshra, Founder and Managing Partner, AMLEGALS · 5 min read · updated 3 September 2026
The short answer

Where an appeal is pending against a demand for which the Section 128A waiver is sought, the appeal must be withdrawn and evidence of withdrawal furnished with the application. The risk is that the appeal is withdrawn and the waiver application is then rejected, leaving the taxpayer with neither. The mitigation is to compute eligibility precisely before withdrawing, to seek withdrawal in terms that record the purpose, and to pay the tax before withdrawal so that the eligibility condition is already satisfied.

The sequence to follow

Confirm eligibility first: the year, the section under which the demand was raised, the absence of an erroneous refund element, and the availability of the waiver for the demand as it stands.

Pay the full tax by the notified date, and obtain the challan.

Apply for withdrawal of the appeal in terms that record it is for the purpose of availing the Section 128A benefit, so that the record is clear if the application is rejected.

File the application with the withdrawal evidence and the challan.

Where the application is rejected, the rejection in SPL-07 is appealable, and the withdrawal recorded for a specific purpose supports a request for restoration of the original appeal.

The judgment call

The waiver requires the full tax to be paid, which means giving up the tax dispute for that period. That is the price.

Compare the tax against the interest and penalty foregone. For a 2017-18 demand under Section 73 the interest alone is frequently comparable to the tax.

Then weigh the strength of the tax case. A strong case on limitation or on the merits may be worth more than the waiver, particularly where the Tribunal is functioning and the issue recurs in later years.

Consider the later years. Paying for 2017-18 to 2019-20 does not settle 2020-21 onwards, and a payment recorded as voluntary without a protest letter will be used for those years.

What to do on Monday

  1. Confirm eligibility and pay the tax before withdrawing the appeal, never the other way round.

  2. Record the purpose of the withdrawal in the withdrawal application itself.

  3. Compare the tax paid against the interest and penalty foregone, in writing, before deciding.

  4. Record in the application that no position is admitted for other periods.

On your own facts

This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.

Write to the GST practice

Questions we are asked on this

Can we withdraw an appeal in part?

Where the demand is severable and the appeal can be confined, examine it with the appellate authority. A partial withdrawal must be recorded clearly.

What if the waiver application is rejected after withdrawal?

Appeal the rejection, and seek restoration of the original appeal, relying on the recorded purpose of the withdrawal.

Does paying under the scheme affect later years?

It can be used as an admission for later years unless the payment and the application record that no position is admitted. Say so in writing.

Is the appeal withdrawal mandatory?

Where an appeal is pending against the demand for which the waiver is sought, yes, with evidence of withdrawal.

What if the department has appealed?

Examine the position before applying; a departmental appeal changes the analysis and may affect eligibility.

In this cluster

GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.