Section 128A – Waiver of interest or penalty or both relating to demands raised under section 73, for certain tax periods
(Finance Act (No.2): Section 146 w.e.f. from 01/11/2024)
Introduction:
The GST Amnesty Scheme, introduced under Section 128A of the Finance Act (No. 2) 2024, aims to provide relief by waiving interest and penalty for certain taxpayers involved in disputes under Section 73 of the GST Act, for the period from 1st July 2017 to 31st March 2020. This scheme covers various cases such as pending show cause notices, orders in original or appeals, and cases where matters have been remanded for adjudication under Section 73.
Period covered under the scheme: 1st July 2017 to 31st March 2020
I) List of Cases covered under this GST Amnesty Scheme
| Sr.
No. |
Section | Case Covered | Condition | Interest Waiver | Penalty Waiver |
| 1 | 73(1) or 73(3) | Show Cause Notice | SCN is pending at adjudication and no order under Sec. 73(9) has been issued | Yes | Yes |
| 2 | 73(9) | Order-in-Original (OIO) | First Appeal is pending against and no OIA under Sec. 107(11) or 108(1) (i.e. Order by Revisional Authority) has been issued. | Yes | Yes |
| 3 | 107(11)
or 108(1) |
Order-in-Appeals (OIA) | Second Appeal is pending and no Order under Sec 113(1) (i.e. Order by Appellate Tribunal) has been issued. | Yes | Yes |
| 4 | 74(1) | Show Cause Notice | Where the case was originally covered under Section 74 but has been remanded back or is to be remanded back by the Appellate Authority or Tribunal or Court to be adjudicated under Section 73 in accordance with the power confined under Section 75(2) of the Act. | Yes | Yes |
II) Time limit to pay the tax under dispute – Notification No. 21/2024–CT dated 08/10/2024
| For Cases of | Due to date to make payment |
| Demand made under Section 73 (Sr. No. (1), (2) and (3) of Table I) | 31.03.2025 |
| Demand made originally under 74 but then sought to be re-adjudicated u/s 73 (Sr. No. (4) of Table I) | Within 6 Months from date of issuance of order by Proper officer after re-determining the liability as per Section 73. |
III) Conditions
A. Primary Condition: Applicant pays the full amount of tax payable on or before the date as per the table above.
B. Additional Conditions / Points to be considered
1. No refund for Interest or Penalty has already been paid by the Applicant for the period covered above.
2. The entire section is not applicable in cases where notice/order is issued for demand of an erroneous refund only.
3. Benefit of this section shall be withdrawn where an appeal or a writ petition is filed by the Applicant for the cases referred in the Table I unless such an appeal/writ petition is withdrawn, or an application of withdrawal is filed prior to the filing of the application under this section.
IV) Procedure for filing Application under the scheme
1. Application Form and its Time limits
| For Case covered under | Form | Form for making Payment of Tax | Time Limit | Last date |
| Sr. No. (1) of Table I | FORM GST SPL-01 | FORM GST DRC-03** | Within 3 Months from the date notified under Section 128A (1). | 30.06.2024 |
| Sr. No. (2) and (3) of Table I | FORM GST SPL-02 | FORM GST DRC-03** | Within 3 Months from the date notified under Section 128A (1). | 30.06.2024 |
| Sr. No. (4) of Table I | FORM GST SPL-02 | FORM GST DRC-03** | Within 6 Months from the date of communication of order redetermining liability under Section 73. | Depends on date of issuance of order. |
* * – Payment shall be made via credit entry against the demand created (debit entry) in the Electronic Liability Register (hereby afterward referred as “ELR”) by the said notice or order. Further, if payment has already been made via DRC-03 earlier and the same was not adjusted against the demand created in ELR, then the said person shall file an application in Form DRC-03A to adjust the demand created with the DRC-03 filed earlier.
Important Note: The tax due as per the notice or the order shall not include the amount not payable anymore due to the retrospective insertion of sub-section (5) and (6) to Section 16.
2. Documents required at the time of filing application.
i. Form DRC-03 indicating payment of full tax due as per the notice or order.
ii. Document evidencing withdrawal of an appeal or writ petition filed against the said notice or order (if any).
iii. In case withdrawal order is not issued till the time of filing application then, provide copy of application for withdrawal filed before the concerned authority. However, the Applicant needs to submit the final withdrawal order within 1 month of its issuance.
3. Notices, Orders and Appeals
A. Notices
| Particulars | Form | Time Limit |
| If the Proper officer is not satisfied with application, he shall issue a notice. | FORM GST SPL-03 | Within 3 months from the date of receipt of the said application |
| The Applicant can file a reply against the notice issued. | FORM GST SPL-04 | Within 1 month from the date of receipt of the said notice |
| If the Proper officer is satisfied with application and no FORM GST SPL-03 has been issued, then he shall issue an order. | FORM GST SPL-05
|
Pass an order within 3 months from the date of receipt of the said application |
B. Orders
| Particulars | Form | Remarks | Time Limits** |
| If the Proper officer is satisfied with the reply filed via FORM GST SPL-04 | FORM GST SPL-05 | The Proper officer shall accept the application and conclude the proceedings under Section 128A. | Pass an order within 3 months from the date of receipt of reply in case the reply is received or within 4 months from the date of issuance of notice via FORM GST SPL-03, in case no reply is received.
|
| If the Proper officer is not satisfied with reply filed via FORM GST SPL-04 | FORM GST SPL-07 | The Proper officer shall reject the application. |
** – Period from the date of filing application till submission of final withdrawal order of appeal or writ petition (in case where at the time of application the same was not provided) shall be excluded for the calculating time limit for issuance of order mentioned in the above table.
Note: In case, no order is passed within the time limits as mentioned in the table above, then the application shall be deemed to be approved, and the proceedings shall be deemed to be concluded.
C. Appeals
| Particulars | Form | Remarks | Time Limits** |
| If Proceedings are concluded under this Section via FORM GST SPL-05 | –
|
No Appeal shall be allowed against this order. | – |
| If the Application is rejected via FORM GST SPL-07 | FORM GST APL-01 | Appeal can be filed, only regarding applicability of this section and not on the merits of original notice/order | Within the time limit as specified under Section 107 of the Act. |
D. Manner of proceeding in case where Appeal is filed/not filed against FORM GST SPL-07
| Particulars | Appellate Authority POV | Form | Explanation |
| If Appeal is filed against rejection order | The proper officer has rightly rejected the application | FORM GST APL-04 | The original appeal shall stand restored, which was withdrawn earlier provided he files an undertaking in FORM GST SPL-08, that he has neither filed nor intends to file any appeal against such order of the Appellate Authority. |
| If Appeal is filed against rejection order | The proper officer has wrongly rejected the application. | FORM GST SPL-06 | It means the applicant is eligible for waiver of interest or penalty or both. |
| If Appeal is not filed against rejection order
|
– | – | The original appeal filed shall be restored. |
4. Frequently asked questions:
| Sr. No | Questions | Answers |
| 1 | Can interest or penalty paid earlier during adjudication be adjusted against the tax demand?
|
No, the adjustment of interest or penalty paid earlier is not allowed. |
| 2 | Tax recovered by a proper officer from another person on behalf of the applicant be adjusted against the tax demand? | Yes, provided the same is recovered before the time limit as specified under Section 128A |
| 3 | Whether benefit of this section be available if the tax due has already been paid and the demand pertains to only interest or penalty? | Yes, 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. |
| 4 | Can we make application for partial waiver and opts to litigate the remaining issues | No, application is allowed only when full tax is due as per notice/order being paid. |
| 5 | Where notice/orders involve multiple periods, even those periods being not covered under Section 128A, can still the benefit be extended to such periods? | No, the waiver of interest or penalty or both under Section 128A shall only be applicable for the period specified in this section and not for the period not covered under the said section.
However, you are eligible to file an application for the period covered under this section only after payment of full tax due as per the notice covering both the periods. |
| 6 | Where demand under notice/order also include demand of erroneous refund, can still the application be filed? | Yes, the application can be filed only after payment of full tax due as per notice/order including demand of erroneous refund, however 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. |
| 7 | 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? | The Applicant needs to pay such additional amount of tax within 3 months from the date of the said order. If not paid, waiver of interest or penalty or both under section 128A as per the order issued in FORM GST SPL-05 shall become void. |
| 8 | Does Special Leave Petition (SLP) filed before Supreme Court is being included for the waiver of interest or penalty or both under this section? | Yes, the applicant needs to file for withdrawal of SLP and then file the application under this section. |
| 9 | Whether Section 128A covers cases involving demand of irregularly availed transitional credit? | Yes, provided the period of availment of transitional credit is covered under this section and the notice/order is issued under Section 73 of the Act. |
| 10 | Which penalties are considered under the waiver? | Penalties under sections like 73, 122, 125 etc. of this Act are considered for waiver. However, late fees, redemption fine etc. are not covered under the waiver provided. |
| 11 | Can ITC be utilized for payment of tax dues? | Yes, however for demand to be paid by recipient under RCM or by ECO under Section 9(5), the same needs to be paid by cash only. |
| 12 | With retrospective insertion of sub-sections (5) and (6) to Section 16 of the CGST Act, the tax demanded in notice/ statement/ order reduces? | Yes, but only to the extent where ITC has been denied solely on account of contravention of Section 16(4) of the CGST Act and not on any other grounds.
Further, it is advised to provide breakup of the amount not payable along with the application.
No 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. |
Explanation:
1. The proper officer for the issuance of orders under this section for the cases covered under Sr. No. (1) of the table, shall be a proper officer as per the provision of Section 73 of the Act.
2. The proper officer for the issuance of orders under this section for the cases covered under Sr. No. (2) and (3) of the table, shall be a proper officer as per the provision of Section 79 of the Act.
Conclusion:
The GST Amnesty Scheme offers a great opportunity for taxpayers to settle pending disputes under Section 73 of the GST Act by waiving interest and penalty provided the full tax amount is paid within time period specified above and adhering to all prescribed conditions. This scheme provides a straightforward way to settle pending disputes without the additional financial burden of Interest and penalties and also helps the government to clear backlogs, which results into win-win situations for both. Hope we see more such schemes for settling litigation in other provisions because litigation under GST has been mounting in leaps and bounds.
Authors:
 |
 |
| Rishabh Jain
Article Assistant |
Nitesh Jain
Chartered Accountant |
Author Bio
