Section 128A of the CGST Act, effective from September 27, 2024, through Notification No. 17/2024, provides taxpayers relief from interest and penalties in non-fraud cases. This section aims to reduce litigation by deeming proceedings concluded if the taxpayer pays the full tax amount for periods between July 1, 2017, and March 31, 2020. Notification No. 21/2024 further specifies March 31, 2025, as the deadline for payment to avail waivers, with provisions for cases involving orders under Sections 73, 107, and 108. Taxpayers must withdraw pending appeals or writ petitions to benefit under this scheme. However, relief is not available for erroneous refunds, and no refund is granted for interest or penalties already paid. Rule 164, effective from November 1, 2024, designates the proper officer for processing applications under Section 128A. While the scheme offers conditional waivers, additional taxes determined by appellate authorities must be paid within three months of their order. Taxpayers must choose between continuing their appeals or opting for relief under Section 128A, as decisions made under this section are non-appealable. This framework simplifies compliance for taxpayers while ensuring timely resolution of disputes.
SECTION 128A
1. HISTORY OF SECTION 128A:
Section 128A of the CGST Act is inserted vide Clause 142 of the Finance Bill (No. 2) of 2024. The said section is made effective vide clause (a) of Notification No. 17/2024-Central Tax dated 27/09/2024 from 27/09/2024.
2. PURPOSE OF INTRODUCTION OF SECTION 128A:
The section is introduced with an aim at reducing litigation in non-fraud cases. The basic idea is to reduce the pendency of cases which are open to litigation and there are no frauds involved. The government has kept a power with itself to reject applications made under the section and rules thereof in a limited time frame after opting for this scheme.
3. NOTIFIED DATE UNDER SECTION 128A:
As per Notification No. 21/2024 – Central tax dated 8th October 2024,
1. Covered by provisions of Section 128A(1):
31.03.2025 has been notified under sub-section (1) of section 128A of CGST Act as the date on or before which the full payment of tax demanded in the notice/ statement/ order needs to be made by the taxpayer in order to avail the benefit of waiver of interest or penalty or both under the said section
2. Covered by the first proviso to Section 128A (1):
Six months from the date of issuance of such order by the proper officer redetermining the tax under section 73 of CGST Act.
4. CONTENT OF SECTION 128A:
Section Heading: Waiver of interest or penalty or both relating to demands raised under section 73, for certain tax periods.
Sec 128A(1): Scope of Section 128A.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS ACT, where any amount of tax is payable by a person chargeable with tax in accordance with, ––
(a) a NOTICE issued under sub-section (1) of section 73, or a statement issued under sub-section (3) of section 73, and where no order under sub-section (9) of section 73 has been issued; or
(b) an ORDER passed under sub-section (9) of section 73, and where no order under sub- section (11) of section 107 or sub-section (1) of section 108 has been passed; or
(c) an ORDER passed under sub-section (11) of section 107 or sub-section (1) of section 108, and where no order under sub-section (1) of section 113 has been passed,
pertaining to the PERIOD FROM 1ST JULY 2017 TO 31ST MARCH, 2020, OR A PART THEREOF, and the said person PAYS THE FULL AMOUNT OF TAX PAYABLE as per the notice or statement or the order referred to in clause (a), clause (b) or clause (c), as the case may be, ON OR BEFORE THE DATE, as may be notified by the Government on the recommendations of the Council, NO INTEREST UNDER SECTION 50 AND PENALTY under this Act, SHALL BE payable and ALL THE PROCEEDINGS in respect of the said notice or order or statement, as the case may be, SHALL BE DEEMED TO BE CONCLUDED, subject to such conditions as may be prescribed:
CA Pratibha Singh Comment:Notified Date: 31/03/2025. The easiest way to understand the scope is to put it in a question-answer form. The same is as under: 1. What is covered? a. Notice u/s 73(1) is issued or Statement u/s 73(3) is issued and no order is b. Order u/s 73(9) and where no order is passed u/s 107(11) or u/s 108(1) c. Order u/s 107(11) or u/s 108(1) issued and no order u/s 113(1) is 2. What is not covered? Anything other than the above 3. What period is covered? The period starting from 01/07/2017 to 31/03/2020 or part thereof. (Starting of GST up to FY 2019-20) 4. What period is not covered? Period starting from 01/04/2020 and onwards. (FY 2020- 21 onwards) 5. What is the relief granted? The taxpayer is neither supposed to pay any interest under section 50 nor any penalty leviable under this act in respect of the said notice or order or statement. 6. What happens to the notice/statement/order as the case may? The said notice or order or statement, as the case may be, shall be deemed to be concluded 7. Is the waiver conditional or unconditional? It is a conditional waiver. |
First Proviso to Sec 128A(1):
Provided that where a notice has been issued under subsection (1) of section 74, and an order is passed or required to be passed by the proper officer in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court in accordance with the provisions of sub-section (2) of section 75, the said notice or order shall be considered to be a notice or order, as the case may be, referred to in clause (a) or clause (b) of this sub-section:
Second Proviso to Sec 128A(1):
Provided further that the conclusion of the proceedings under this sub-section, in cases where an application is filed under sub-section (3) of section 107 or under sub-section (3) of section 112 or an appeal is filed by an officer of central tax under sub-section (1) of section 117 or under sub-section (1) of section 118 or where any proceedings are initiated under sub-section (1) of section 108, against an order referred to in clause (b) or clause (c) or against the directions of the Appellate Authority or the Appellate Tribunal or the court referred to in the first proviso, SHALL BE SUBJECT TO THE CONDITION that the said person pays the ADDITIONAL AMOUNT OF TAX PAYABLE, if any, IN ACCORDANCE WITH THE ORDER of the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority, as the case may be, WITHIN THREE MONTHS FROM THE DATE OF THE SAID ORDER:
| CA Pratibha Singh Comment:
As per proviso (2), any additional amount of tax, if any which is payable on account of the following orders needs to be paid within 3 months from the date of the said order. Sections covered: 1. Application u/s 107(3) or 2. Application u/s 112(3) or 3. Application u/s 117(1) or 4. Application u/s 118(1) or 5. Application u/s 108(1) The additional amount can be payable on account of: 1. Commissioner (Appeals) increasing the amount of the lower 2. Tribunal increasing the amount of the lower 3. High Court increasing the amount of the lower 4. Supreme increasing the amount of the lower In order to avail the benefit under this proviso, additional tax needs to be paid by the tax payer. |
Third Proviso to Sec 128A(1):
Provided also that where such interest and penalty has already been paid, no refund of the same shall be available.
| CA Pratibha Singh Comment:
As per proviso (3), No refund will be granted to the taxpayer for the amount of interest or penalty already paid. |
Sec 128A(2): Erroneous Refund needs to be paid back.
NOTHING CONTAINED IN SUB-SECTION (1) SHALL BE APPLICABLE IN RESPECT OF ANY AMOUNT PAYABLE BY THE PERSON ON ACCOUNT OF ERRONEOUS REFUND.
| CA Pratibha Singh Comment:
If the order is for erroneous refund, no relief is available u/s 128A. It needs to be paid back with interest and penalty, if applicable. |
Sec 128A(3): Appeal/Writ needs to be withdrawn in order to avail benefit of Section 128A: Nothing contained in sub-section (1) shall be applicable in respect of cases where AN APPEAL OR WRIT PETITION filed by the said person IS PENDING BEFORE APPELLATE AUTHORITY OR APPELLATE TRIBUNAL OR A COURT, as the case may be, and HAS NOT BEEN WITHDRAWN by the said person on or before the date notified under sub-section (1).
Sec 128A(4): Order passed u/s 128A(1) are not appealable orders.
| CA Pratibha Singh Comment:
The taxpayer needs to decide on the remedy sought by it. The taxpayer can either continue with the appeal or the writ filed by it at the appropriate level or can opt for the relief provided u/s 128A. The taxpayer cannot opt for both the remedies simultaneously. |
NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, where any amount specified under sub-section (1) has been PAID AND THE PROCEEDINGS ARE DEEMED TO BE CONCLUDED
under the said sub-section, NO APPEAL under sub-section (1) of section 107 or sub-section (1) of section 112 SHALL LIE AGAINST an order referred to in clause (b) or clause (c) of sub-section (1), as the case may be.”.
RULE 164
1. HISTORY OF RULE 164:
Rule 164 is newly inserted after Rule 163 vide Notification No. 20 – Central Tax dated 08/10/2024 and is effective from 01/11/2024.
2. CONTENT OF RULE 164:
Explanation.–
For the purposes of this rule, the proper officer for issuance of order under this rule,–
(a) in cases where the application for waiver of interest, or penalty, or both is made with respect to a notice or statement mentioned in clause (a) of sub-section (1) of section 128A, shall be the proper officer for issuance of order as per section 73; and
(b) in cases where the application for waiver of interest, or penalty, or both, is made with respect to an order mentioned in clause (b) or clause (c) of sub-section (1) of section 128A, shall be the proper officer referred to in section 79 of the Act.”.
| CA Pratibha Singh Comment:
This rule is applicable to the whole of Rule 164. It discusses as to who is the proper officer as referred to in Rules at various places. Clause (a): Notice/Statement mentioned in 128A(1)(a) The proper officer is the officer who is responsible for issuance of order under section 73 and NOT THE OFFICER who has issued SCN in case both are different. Clause (b): Order as mentioned in 128A(1)(b)/(c) The proper officer as referred to in section 79. |
Rule 164: Procedure and conditions for closure of proceedings under section 128A in respect of demands issued under section 73.
Rule 164(1): FORM GST SPL-01 (for notice/statement) needs to be filed by eligible person Any person who is eligible for waiver of interest, or penalty, or both IN RESPECT OF A NOTICE OR A STATEMENT mentioned in clause (a) of sub-section (1) of section 128A, may file an application electronically in FORM GST SPL-01 on the common portal, providing the details of the said notice or the statement, as the case may be, along with the details of the payments made in FORM GST DRC-03 towards the tax demanded.
| CA Pratibha Singh Comment:
The taxpayer is required to file an application in FORM GST SPL-01 along with proof of payment in FORM GST DRC-03 when a notice/statement is issued but the order is not issued. |
Rule 164(2): FORM GST SPL-02 (for orders) needs to be filed by eligible person
Any person who is eligible for waiver of interest, or penalty, or both, IN RESPECT OF ORDERS mentioned in clauses (b) and (c) of sub-section (1) of section 128A, may file an application electronically in FORM GST SPL-02 on the common portal, providing the details of the said order, along with the details of the payments made towards the tax demanded:
| CA Pratibha Singh Comment:
The taxpayer is required to file an application in FORM GST SPL-02 along with proof of payment in FORM GST DRC-03 when an order is issued. |
First Proviso to Rule 164(2):
Provided that the payment towards such tax demanded shall be made only by crediting the amount in the electronic liability register against the debit entry created by the said order:
Second Proviso to Rule 164(2):
| CA Pratibha Singh Comment:
The taxpayer is required to make the payment only by crediting the amount in electronic liability ledger that is made against the order. |
Provided further that if the payment towards such tax demanded has been made through FORM GST DRC-03, an application in FORM GST DRC-03A, as prescribed in sub-rule (2B) of rule 142, shall be filed by the said person for credit of the said amount in the Electronic Liability Register against the debit entry created for the said demand, before filing the application in FORM GST SPL 02.
Rule 164(3): Full tax amount for all reasons needs to be paid before filing application.
Where the notice or statement or order mentioned in sub-section (1) of section 128A includes demand of tax, PARTIALLY ON ACCOUNT OF ERRONEOUS REFUND AND PARTIALLY FOR OTHER REASONS, an application under sub-rule (1) or sub-rule (2) may be filed only after payment of the full amount of tax demanded in the said notice or statement or order, on or before the date notified under the said sub-section.
| CA Pratibha Singh Comment:
Notice/Statement/Order contains demands on account of two grounds: 1. Partly – Erroneous Refunds 2. Partly – Other Grounds The taxpayer is supposed to file the application only after making the full amount of tax demanded on or before the notified date. |
Rule 164(4): Full tax amount for all periods needs to be paid before filing application.
Where the notice or statement or order mentioned in sub-section (1) of section 128A includes demand of tax, PARTIALLY FOR THE PERIOD MENTIONED IN THE SAID SUB-SECTION AND PARTIALLY FOR THE PERIOD OTHER THAN THAT MENTIONED IN THE SAID SUB-SECTION, an application under sub-rule (1) or subrule (2) may be filed only after payment of the full amount of tax demanded in the said notice or statement or order, on or before the date notified under the said sub-section.
| CA Pratibha Singh Comment:
Notice/Statement/Order contains demands on account of two grounds: 1. Partly – Period covered u/s 128A 2. Partly – Period NOT covered u/s 128A The taxpayer is supposed to file the application only after making the full amount of tax demanded on or before the notified date. |
Rule 164(5): Liability u/s 16(4) of the respective periods will be excluded from liability.
The amount payable under sub-rule (1) or sub-rule (2) shall be the amount that remains payable, after deducting the amount not payable in accordance with sub-section (5) or sub-section (6) of section 16, from the amount payable in terms of the notice or statement or order under section 73, as the case may be.
| CA Pratibha Singh Comment:
Notice/Statement/Orders contains demands on account of two grounds: 1. Partly – Matters of section 16(4) 2. Partly – Matters other than section 16(4) The taxpayer is supposed to file the application only after making the full amount of tax excluding tax demanded u/s 16(4). |
Rule 164(6): Application to be filed within 3 months.
Any person who wishes to file an application under sub-rule (1) or sub-rule (2), may do so within a period of three months from the date notified under sub-section (1) of section 128A:
| CA Pratibha Singh Comment:
Application under Rule 164(1) or 164(2) needs to be filed within 3 months from notified date of Section 128A(1). Notified Date u/s 128A: 31/03/2025. Last Date to File application under Rule 164(6): 30/06/2025. |
Proviso to Rule 164(6):
Provided that where an application in FORM GST SPL-02 is to be filed in cases referred to in the first proviso to sub-section (1) of section 128A, the time limit for filing the said application shall be six months from the date of communication of the order of the proper officer redetermining such tax under section 73.
| CA Pratibha Singh Comment:
Application under Rule 164(1) or 164(2) needs to be filed within 3 months from notified date of Section 128A(1). |
Rule 164(7): Documents of appeal/writ withdrawal needs to be accompanied with application.
The application under sub-rule (1) or sub-rule (2) shall be accompanied by documents evidencing withdrawal of appeal or writ petition, if any, filed before any Appellate Authority, or Tribunal or Court, as the case may be, to establish that the applicant is eligible for the waiver of interest or penalty or both, in terms of section 128A:
| CA Pratibha Singh Comment:
Application under Rule 164(1) or 164(2) shall be accompanied with the proof that the appeal/writ petition if any filed before the Appellate Authority/Tribunal/Court is withdrawn. This is done in order to ensure that the applicant is eligible for the waiver of interest/penalty or both. |
Proviso to Rule 164(7):
Provided that where the applicant has filed an application for withdrawal of an appeal or writ petition filed before the Appellate Authority or Appellate Tribunal or a court, as the case may be, but the order for withdrawal has not been issued by the concerned authority till the date of filing of the application under sub-rule (1) or sub-rule (2), the applicant shall upload the copy of such application or document filed for withdrawal of the said appeal or writ petition along with the application under sub-rule (1) or sub-rule (2), and shall upload the copy of the order for withdrawal of the said appeal or writ petition on the common portal, within one month of the issuance of the said order for withdrawal by the concerned authority.
| CA Pratibha Singh Comment:
Where after filing for withdrawal of appeal, the concerned authority has not passed the order for withdrawal of the same, the applicant shall upload copy of such application. Once the concerned authority issues the order for withdrawal of the appeal/writ, the same shall be uploaded on the common portal within 1 month of the issuance of the order. |
Rule 164(8): PO to issue notice in FORM GST SPL-03 before rejecting the application.
Where the proper officer is of the view that the application made in FORM GST SPL-01 or FORM GST SPL-02 is liable to be rejected as not being eligible for waiver of interest, or penalty, or both, as per section 128A, he shall issue a notice on the common portal to the applicant in FORM GST SPL-03 within three months from the date of receipt of the said application and shall also give the applicant an opportunity of being heard.
| CA Pratibha Singh Comment:
If the PO is of the view that the applicant is not eligible for the waiver under this act, the PO shall issue a notice in FORM GST SPL-03 on the common portal within 3 months from the date of receipt of the said application. The PO should give an opportunity of being heard to the applicant before passing the order. |
Rule 164(9): Applicant to file reply in FORM GST SPL-04.
On receiving the notice under sub-rule (8), the applicant may file a reply to the said notice on the common portal in FORM GST SPL-04, within a period of one month from the date of receipt of the said notice.
| CA Pratibha Singh Comment:
The applicant may file a reply in FORM GST SPL-04 within a period of 1 month from the date of receipt of notice in FORM GST SPL-03. |
Rule 164(10): PO to issue order in FORM GST SPL-05.
If the proper officer is satisfied that the applicant is eligible for waiver of interest and penalty as per section 128A, he shall issue an order in FORM GST SPL-05 on the common portal accepting the said application and concluding the proceedings under section 128A.
| CA Pratibha Singh Comment:
If the PO is satisfied that the applicant is eligible for waiver of interest/penalty, he shall issue an order in FORM GST SPL-05 on the common portal. |
Rule 164(11): Effects of issuance of FORM GST SPL-05.
In cases where the order in FORM GST SPL-05 is issued by the proper officer under sub-rule (10).–
(a) in respect of an application filed in FORM GST SPL-01 pertaining to a notice or statement referred to in clause (a) of sub-section (1) of section 128A, the summary of order in FORM GST DRC-07 as per sub-rule (5) of rule 142 shall not be required to be issued by the proper officer, in respect of the said notice or statement;
(b) in respect of an application filed in FORM GST SPL-02 pertaining to an order referred to in clause (b) or clause (c) of sub-section (1) of section 128A, the liability created in the part II of Electronic Liability Register, shall be modified accordingly.
| CA Pratibha Singh Comment:
Clause (a): Where FORM GST SPL-01 is filed The PO shall not issue order in FORM GST DRC-07. Clause (b): Where FORM GST SPL-02 is filed The liability created in the Part II of Electronic Liability Register shall be modified accordingly. |
Rule 164 (12): PO can reject reply of the applicant and issue order in FORM GST SPL-07.
If the proper officer is not satisfied with the reply of the applicant, the proper officer shall issue an order in FORM GST SPL-07 rejecting the said application.
| CA Pratibha Singh Comment:
If the PO is not satisfied with the applicant reply, he shall pass the order rejecting the application in FORM GST SPL-07. |
Rule 164(13): PO to decide the status of application in 3 months.
(a) In cases where notice in FORM GST SPL-03 has not been issued, the proper officer shall issue the order under sub-rule (10) within a period of three months from the date of receipt of the application in FORM GST SPL-01 or FORM GST SPL-02, as the case may be.
(b) In cases where notice in FORM GST SPL-03 has been issued, the proper officer shall issue the order in sub-rule (10) or sub-rule (12) within a period of three months from the date of receipt of reply of the applicant in FORM GST SPL-04, or within a period of four months from the date of issuance of notice in FORM GST SPL-03 where no reply is received from the applicant.
Explanation.–
For the purposes of this sub-rule, in cases referred to in the proviso to sub-rule (7), the time period from the date of filing of the application under sub-rule (1) or sub-rule (2) till the date of submission of the order for withdrawal of the appeal or the writ, as the case may be, shall not be included while calculating the time period under clause (a) or clause (b) of this sub-rule.
| CA Pratibha Singh Comment:
Clause (a): Where FORM GST SPL-03 is not issued. The PO shall issue order in FORM GST SPL-05 within 3 months from the date of receipt of the application in FORM GST SPL-01/02. Clause (b): Where FORM GST SPL-03 is issued. Case 1: Applicant furnishes a reply: The PO shall issue order in FORM GST SPL-05/07 within 3 months from the date of receipt of the reply in FORM GST SPL-04. |
–
| Case 2: Applicant does not furnish a reply:
The PO shall issue order in FORM GST SPL-05/07 within 4 months from the date of issuance of the notice in FORM GST SPL-03. As per the Explanation, if the order of withdrawal is not passed, the period between the date of application to the date of passing of the said order shall not be included while calculating the above-mentioned period of 3/4 months. |
Rule 164(14): If no order is issued timely, application is deemed to be approved.
If no order is issued by the proper officer within the time limit specified in sub-rule (13), then the application in FORM GST SPL-01 or FORM GST SPL-02, as the case may be, shall be deemed to be approved and the proceedings shall be deemed to be concluded.
| CA Pratibha Singh Comment:
If the PO does not issue the order timely, the application in FORM GST SPL-01 or FORM GST SPL-02 is deemed to be approved and all proceedings are deemed to be concluded. |
Rule 164(15):
(a) In cases where no appeal is filed against the order in FORM GST SPL-07 within the time period specified in sub-section (1) of section 107, the original appeal, if any, filed by the applicant against the order mentioned in clause (b) or clause (c) of sub-section (1) of section 128A, and withdrawn for filing the application in FORM GST SPL-02 in accordance with sub-section (3) of section 128A, shall be restored.
(b) In cases where an appeal is filed against the order in FORM GST SPL-07 for rejection of application for waiver of interest, or penalty, or both, if—
(i) the appellate authority has held that the proper officer has wrongly rejected the application for waiver of interest, or penalty, or both, in FORM GST SPL-07, the said appellate authority shall pass an order in FORM GST SPL-06 on the common portal accepting the said application and concluding the proceedings under section 128A; or
(ii) the appellate authority has held that the proper officer has rightly rejected the application for waiver of interest, or penalty, or both, in FORM GST SPL-07, the original appeal, if any, filed by the applicant against the order mentioned in clause (b) or clause (c) of sub-section (1) of section 128A, and withdrawn for filing the application in FORM GST SPL-02 in accordance with sub-section (3) of section 128A, shall be restored, subject to condition that the applicant files an undertaking electronically on the portal in FORM GST SPL-08, within a period of three months from the date of issuance of the order by the appellate authority in FORM GST APL-04, that he has neither filed nor intends to file any appeal against the said order of the Appellate Authority.
| CA Pratibha Singh Comment:
Clause (a): The applicant chooses not to appeal against the order passed in FORM GST SPL-01. The PO has passed order in FORM GST SPL-07 stating that the applicant was not eligible for the benefit of Section 128A. The applicant chose not to appeal against the same. In this case, the application made under section 128A shall be considered to be invalid and the original appeal which was filed by the applicant and later withdrawn will stand restored. Clause (b): The applicant chooses to appeal against the order passed in FORM GST SPL-01. |
–
| (i) The appellate authority decides the matter in favour of the
The authority has held that the PO was wrong in rejecting the application, it shall pass an order in FORM GST SPL-06 on the common portal and the provisions of Sec 128A continues to apply. (ii) The appellate authority decides the matter in favour of the proper The authority has held that the PO was right in rejecting the application, it shall pass an order in FORM GST SPL-06 on the common portal and the original appeal filed under the provisions of Sec 107/108 shall be restored subject to an undertaking wherein the applicant forgoes his right to file an appeal against this order. |
Rule 164(16): Additional payment needs to be made timely, else the order becomes void. In cases where the taxpayer is required to pay an additional amount of tax liability as per the second proviso to sub-section (1) of section 128A, and such additional payment is not made within the time limit specified in the said proviso, the waiver of interest, or penalty, or both, under the said section as per the order issued in FORM GST SPL-05 or FORM GST SPL-06, if any, shall become void.
| CA Pratibha Singh Comment:
When the taxpayer is required to make additional payment of tax and he does not make the payment within the specified time limit, the order issued in FORM GST SPL-05 or FORM GST SPL-06 shall become void. |
Rule 164(17): Interest/Penalty to be paid.
In cases where the taxpayer is required to pay any amount of interest, or penalty, or both, in respect of any demand pertaining to erroneous refund or on account of demand pertaining to the period other than the period mentioned in sub-section (1) of section 128A, and the details of such amount have been mentioned in FORM GST SPL-05 or FORM GST SPL-06, the applicant shall pay the said amount of interest, or penalty, or both, WITHIN A PERIOD OF THREE MONTHS from the date of issuance of the order in FORM GST SPL-05 or FORM GST SPL-06, as the case may be, and where the said amount is not paid within the said time period, the waiver of interest, or penalty, or both, under section 128A as per the order issued in FORM GST SPL-05 or FORM GST SPL-06, shall become void.
| CA Pratibha Singh Comment:
The applicant will have to pay interest/penalty/both in case of erroneous refund within a period of 3 months |
Page Contents
CIRCULARS ON SECTION 128A AND RULE 165.
1. Circular No. 238/32/2024-GST dated 15/10/2024.
Clarifications issued in the Circular
| S. No. | Issue | Clarification |
| 1 | Whether the benefit provided under Section 128A will be applicable to taxpayers who have paid the tax component in full before the date on which the said section has come into effect? | In this regard, it is to be mentioned that all such amount paid towards the said demand upto the date notified under sub-section (1) of section 128A, irrespective of whether the said payment has been done before Section 128A comes into effect, or after that, and irrespective of whether such payment was made before the issuance of the demand notice or demand order, or after that, shall be considered as paid towards the amount payable in sub-section (1) of Section 128A, as long as the said amount has been paid upto the date notified under sub-section (1) of section 128A and was intended to be paid towards the said demand. |
| 2 | Whether amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer, against a particular demand can be considered as tax paid towards the same for the purpose of Section 128A? | Yes.
The said amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer against a demand, shall also be considered as the tax paid towards the said demand, for the purpose of section 128A provided the same has been recovered on or before the date notified under sub-section (1) of section 128A. |
| 3 | Whether the amount recovered by the tax officers as interest or penalty or both, pertaining to demand under Section 73 pertaining to Financial Years 2017-18, 2018-19 and 2019- 20, can be adjusted against the tax amount payable towards the demand made under Section 73 pertaining to the said financial years? | No.
It is mentioned that as per the third proviso to sub- section (1) of section 128A, no refund of such amount of interest or penalty or both, is available. Accordingly, any amount paid by the taxpayer or recovered by the tax officers, as interest or penalty cannot be adjusted towards the amount payable as tax. |
| 4
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Whether the benefit provided under Section 128A will be applicable in cases, where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved?
|
Where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved, the same shall be considered for availing the benefit of section 128A.
However, the benefit of waiver of interest and penalty shall not be applicable in the cases where the interest has been demanded on account of delayed filing of returns, or delayed reporting of any supply in the return, as such interest is related to demand of interest on self-assessed liability and does not pertain to any demand of tax dues and is directly recoverable under sub-section (12) of section 75. |
| 5 | Whether the benefit under Section 128A is available, if the taxpayer intends to avail partial waiver of interest or penalty or both, on certain issues, by making part payment of the amount demanded in the notice/ statement/ order, as the case may be, and opts to litigate for the remaining issues? | No.
Section 128A (1) clearly provides that the waiver of interest or penalty or both is only applicable when the full amount of tax demanded in the notice/ statement/ order is paid. |
| 6 | Where the notice/order involves multiple periods, ranging from the period for which waiver provided in Section 128A is applicable, and includes some other tax periods for which such waiver is not applicable, whether the benefit of waiver of interest or penalty or both under Section 128A can be availed for the period covered under section 128A?
If so, what is the tax amount payable for claiming waiver under Section 128A? |
The taxpayer is eligible to apply for waiver of interest or penalty or both, in such cases where the demand notice/ order spans tax periods covered under Section 128A and those not covered under the said section. However, as per sub-rule (4) of Rule 164, the taxpayer shall be required to pay the full amount of tax demanded in the notice/ statement / order, as the case may be, to avail the benefit of waiver of interest or penalty or both under Section 128A.
Further, though the amount of tax demanded shall be required to be paid as per the notice/ statement / order, as the case may be, for whole of the period covered under the said notice/ statement / order, but the waiver of interest or penalty or both under section 128A shall only be applicable for the period specified in section 128A, and not for the period not covered under the said section. On payment of the full amount demanded in the notice/ statement/ order, if the proper officer finds that the applicant is eligible for waiver of interest or penalty or both for tax periods covered under Section 128A, he will reduce the liability to that extent in his order in FORM GST SPL-05, and the remaining liability of interest or penalty or both for tax periods not covered under Section 128A, remains payable by the taxpayer. The said amount shall be required to be paid by the applicant within three months from the date of issuance of order in FORM GST SPL-05 or FORM GST SPL-06, as the case may be. If the said amount is not paid within the time limit as mentioned above, the order in FORM GST SPL-05 or FORM GST SPL-06, as the case may be, the waiver of interest or penalty or both under section 128A as per the order issued in FORM GST SPL-05 or FORM GST SPL06, shall become void, as per sub-rule (17) of rule 164. |
| 7 | Where the notice/ statement/ order issued under Section 73 involves multiple issues and one of them is regarding demand of erroneous refund, whether an application can be filed for waiver of interest or penalty or both under Section 128A?
If so, what is the tax amount payable for claiming waiver under Section 128A? |
Yes.
However, as per sub-rule (3) of Rule 164, the taxpayer shall be required to pay the full amount of tax demanded in the notice/ statement / order, as the case may be, including on account of demand of erroneous refund, to avail the benefit of waiver of interest or penalty or both under Section 128A. Further, in such cases, the waiver of interest or penalty or both under section 128A shall only be available in respect of tax demand other than that pertaining to demand of erroneous refund. On payment of the full amount demanded in the notice/ statement/ order, if the proper officer finds that the applicant is eligible for waiver of interest or penalty or both for tax periods covered under Section 128A in respect of tax demand other than that pertaining to demand of erroneous refund, he will reduce the liability to that extent in his order in FORM GST SPL-05, and the remaining liability of interest or penalty or both, that corresponds to demand of erroneous refund, remains payable by the applicant. The said amount shall be required to be paid by the applicant within three months from the date of issuance of order in FORM GST SPL-05 or FORM GST SPL-06, as the case may be. If the said amount is not paid within the time limit as mentioned above, the order in FORM GST SPL-05 or FORM GST SPL-06, as the case may be, the waiver of interest or penalty or both under section 128A as per the order issued in FORM GST SPL-05 or FORM GST SPL06, shall become void, as per sub-rule (17) of rule 164. |
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In cases where department has filed an appeal against the order mentioned in clause (b) or clause (c) of sub-section (1) of section 128A and the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority, has issued an order enhancing the tax liability, and in the meanwhile the proper officer has issued an order in FORM GST SPL-05 under section 128A, and the taxpayer has not paid the said additional amount of tax liability within the specified time limit, what will be the status of the conclusion of proceedings under Section 128A? | Yes, as per the second proviso to section 128A, the conclusion of proceedings in such cases is subject to the condition that the said person pays the additional amount of tax payable, if any, in accordance with the order of the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority, as the case may be, within three months from the date of the said order.
Accordingly, it becomes clear that even in cases where an order in FORM GST SPL-05 or in FORM GST SPL-06 has been issued the conclusion of the said proceedings will be subject to the condition that the taxpayer pays the additional tax amount as determined by the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority by an order issued in the matter of appeal filed by the department, within a period of three months from the date of the such order enhancing the tax liability. In case such additional payment is not done within a period of three months from the date of the said order, then as per sub-rule (16) of Rule 164, the waiver of interest or penalty or both under section 128A as per the order issued in FORM GST SPL-05 shall become void. |
| 9 | Sub-section (3) of section 128A refers to only appeal or writ petition. In this regard, whether matters where SLP filed by the applicant is pending before the Supreme Court, what is the procedure to be followed by the taxpayer to avail the waiver of interest or penalty or both? | Yes, in such cases also the applicant will be required to withdraw the said special leave petition and file an application in FORM GST SPL-01 or FORM GST SPL-02, as the case may be, along with proof of withdrawal of SLP or the copy of the application or any other document filed for withdrawal of SLP, where the order for withdrawal of SLP has not been issued at the time of filing application in FORM GST SPL-01 or FORM GST SPL-02. In such cases, the procedure mentioned in para 3.1.6 may be followed. |
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Whether the benefit provided under Section 128A will be available for matters involving IGST and Compensation Cess? | Yes.
On joint reading of section 20 of the Integrated Goods and Services Tax Act, 2017 and section 11 of GST (Compensation to States) Act, 2017 along with section 128A of CGST Act, it becomes clear that the benefit provided under Section 128A of CGST Act will be available for matters involving IGST and compensation cess as well. In this regard, it is mentioned that in such cases, full payment of tax means payment of CGST, SGST, IGST and compensation cess demanded in the notice/ statement/ order, as the case may be |
| 11 | Whether Section 128A covers cases involving demand of irregularly availed transition credit? | The transitional credit is considered to be availed on the date on which the said credit amount is credited in the Electronic Credit Ledger.
On reading Rule 121 read with sub-rule (3) of rule 117, it is clear that any demand in respect of transitional credit wrongly availed, whether wholly or partly can be made under section 73 or, as the case may be, section 74. Therefore, it is mentioned that if the amount of transitional credit has been availed in the period covered under Section 128A and notice for demand of wrongly availed credit is issued under section 73, the same is covered under Section 128A. |
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Whether Section 128A will cover waiver of penalties under other provisions, late fee, redemption fine etc?
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It is clarified that any penalty, including penalties under section 73, section 122, section 125 etc, demanded under the demand notice/ statement/ order issued under section 73, is covered under the waiver provided under Section 128A.
However, late fee, redemption fine etc are not covered under the waiver provided under Section 128A. |
| 13 | Whether payment to avail waiver under Section 128A can be made by utilizing ITC? | Yes.
The payment of tax required to be made for eligibility for waiver under section 128A is the amount of tax demanded in the notice/ statement/ order. Therefore, it can be paid either by debiting from electronic cash ledger or by utilising the Input Tax Credit (ITC), by debiting the electronic credit ledger, or partly from both. However, where the demand is in respect of any amount of tax to be paid by the recipient under Reverse Charge Mechanism or by the Electronic Commerce Operator under section 9(5), then the said amount shall be required to be paid by debiting the electronic cash ledger only and not through the electronic credit ledger. Further, where the amount has to be paid for demand of erroneous refund, the demand in respect of erroneous refund paid in cash is required to be paid only by debiting the electronic cash ledger only and not through the electronic credit ledger. |
| 14 | Whether the benefit of waiver under Section 128A be availed qua import IGST payable under the Customs Act, 1962? | No.
In such cases, demand is not issued under section 73 of the CGST Act, but is issued under the provisions of Customs Act, 1962 and therefore, such cases are not covered under waiver of interest or penalty or both under section 128A. |
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With retrospective insertion of sub-sections (5) and (6) to Section 16 of the CGST Act, the tax demanded in notice/ statement/ order reduces.
Whether the entire tax amount demanded in the notice/ statement/ order has to be paid in such cases, to avail the benefit under section 128A?
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Customs Act, 1962 and therefore, such cases are not covered under waiver of interest or penalty or both under section 128A.
Sub-rule (5) of rule 164 mentions that the amount payable in order to avail the benefit under section 128A, shall be calculated after deducting the amount not payable in accordance with sub-section (5) or sub- section (6) of Section 16, from the amount payable in terms of the notice or statement or order under section 73, as the case may be. Therefore, the applicant is required to pay only the amount that is payable, calculated after deducting the amount not payable in accordance with sub-section (5) or sub-section (6) of Section 16, from the amount payable in terms of the notice or statement or order under section 73, as the case may be, before submitting the application. While calculating the amount deductible on account of not being payable in accordance with sub-section (5) or sub-section (6) of Section 16, from the amount payable in terms of the notice or statement or order under section 73, as the case may be, taxpayer is required to ensure that such amount is deducted only where ITC has been denied solely on account of contravention of Section 16(4) of the CGST Act and not on any other grounds. He is also advised to provide a breakup of the amount not payable by him anymore, as per sub-sections (5) and (6) of section 16, in FORM GST SPL-01 or FORM GST SPL-02, as the case may be, to enable the officer to verify the payment easily. It is also re-iterated that where the taxpayer is deducting the amount of ITC which was denied on account of contravention of sub-section (4) of section 16 of the CGST Act, but which is now available, as per retrospectively inserted provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, he is not required to file application for rectification in respect of the same as per special procedure notified under Section 148 vide notification No. 22/2024- Central tax dated 8th October 2024. |
| 16 | In case of application in FORM GST SPL-02, where the applicant has paid full or partial amount of tax through FORM GST DRC-03, whether the said applicant is mandatorily required to file application in FORM GST DRC- 03A for such tax amount which he desires to get adjusted against tax demand as per FORM GST DRC-07/ FORM GST
DRC-08/ FORM GST APL-04? |
Yes.
In cases where order in FORM GST DRC-07, FORM GST DRC-08 or FORM GST APL-04, as the case may be, has been issued and such taxpayer has paid required amount through FORM GST DRC-03, such applicant is required to adjust the said amount towards the demand created in the Electronic Liability Register, as per the second proviso to sub-rule (2) of rule 164, before filing the application in FORM GST SPL-02. |
GSTN PORTAL ADVISORY:
1. Link – https://taxguru.in/goods-and-service-tax/waiver-scheme-gst-taxpayers-section-128a.html
Date: Nov 8th, 2024
Content of the Advisory:
For reducing the tax disputes and to provide a big relief to the taxpayers, GST Council in its 53rd meeting held on 22nd June, 2024 had recommended for waiver of interest and penalties in the demand notices or orders issued under Section 73 of the CGST Act, 2017 (i.e. the cases not involving fraud, suppression or wilful misstatement, etc.) for the Financial years 2017-18, 2018-19 and 2019-20. To avail this waiver, the condition is that the full tax demanded is paid on or before 31.03.2025.
In view of the above, Rule 164 of CGST rules, 2017 was notified through Notification No. 20/2024 dated. 8th October 2024, effective from 1st November 2024. This rule provides procedural guidelines for the said waiver scheme. As per the waiver scheme, if a notice or order is issued under Section 73 for the financial years 2017-18, 2018-19 and 2019-20, the taxpayers are required to file an application in FORM GST SPL-01 or FORM GST SPL-02, respectively on the common portal within three months from notified date, which is 31.03.2025.
In this regard it is to inform that Form GST SPL-01 and Form GST SPL-02 are under development and same will be made available on the common portal tentatively from the first week of January 2025. In the meantime, taxpayers are advised to pay the tax amount demanded in the notice, statement, or order issued under Section 73 on or before March 31st, 2025, to ensure that they receive the waiver benefits by paying their taxes before the deadline.
Taxpayer can pay the demanded tax amount through the “payment towards demand” facility in case of demand orders and through Form GST DRC-03 in case of notices. However, if payment has already been done through Form GST DRC-03 for any demand order then taxpayer need to link the said Form GST DRC 03 with such demand order through Form GST DRC-03A, which is now available on the common portal.
Thanking You,
Team GSTN
HOW TO FILE THE SAID APPLICATON ON THE GSTN PORTAL:
1. How to navigate to file the application on the Portal?
Dashboard > Services > User Services > My Applications
2. Click on New Application
3. Select the one which is applicable in your case & proceed We have selected SPL-01 and then click on Create Application. The following screen would appear:
4. Depending on what your case is, answer the following questions and click on
5. If you select SPL-02 instead of SPL-01, the following screen would appear:
6. Depending on what your case is, answer the following questions and click on
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