Appeal for Early Hearing to Waive GST Interest & Penalties – Section 128A

Summary: The recently introduced Section 128A of the Central Goods and Services Tax (CGST) Act, 2017, effective November 1, 2024, enables taxpayers to obtain conditional waivers on interest and penalties for specific tax demands under Section 73, provided they settle the full tax amount by March 31, 2025. This waiver applies to cases with pending notices or statements, adjudicated orders without appeal, and re-determined cases due to appellate or court directions, covering the tax periods from July 1, 2017, to March 31, 2020. Rule 164 of the CGST Rules, also effective from November 1, 2024, details procedures and conditions for such waivers. To ensure timely access to these benefits, the GST Network (GSTN) has advised taxpayers to pay the required tax before March 31, 2025, as online forms for this process will be available by early January 2025. Taxpayers may find it advantageous to request an early hearing from appellate authorities, particularly if orders were issued without complete verification, or where extended periods under Section 74 (for cases of suppression or fraud) might lack sufficient grounds. By re-assessing under Section 73, taxpayers may qualify for the waiver benefits if fraud criteria are not met. An example draft letter is provided for taxpayers to formally request expedited hearings to reduce penalties and interest, thus easing the compliance burden.

REQUEST FOR EARLY HEARING OF APPEAL

(To avail benefit waiver of interest and penalties under section 128A CGST Act, 2017)

Section 128A of the Central Goods and Services Tax (CGST) Act, 2017, introduced effective November 1, 2024, provides a conditional waiver of interest and penalties for specific tax demands under Section 73. This provision aims to alleviate the compliance burden for taxpayers concerning certain tax periods.

Situations Covered Under Section 128A:

1. Pending Notices or Statements: If a taxpayer has received a notice under Section 73(1) or a statement under Section 73(3) for the tax periods from July 1, 2017, to March 31, 2020, and no order under Section 73(9) has been issued, they can benefit from this waiver by paying the full tax amount demanded.
2. Adjudicated Orders Without Further Appeals: In cases where an order has been issued under Section 73(9) for these periods, and no appeal or revision order under Section 107(11) or Section 108(1) has been passed, taxpayers can use the waiver by settling the full tax liability.
3. Orders from Appellate or Revisional Authorities: If an order has been passed by the Appellate Authority under Section 107(11) or the Revisional Authority under Section 108(1) for the mentioned periods, and no order under Section 113(1) has been issued, the taxpayer can obtain the waiver upon full payment of the tax due.
4. Re-determination Cases: When a notice was initially issued under Section 74(1) but  following directions from an Appellate Authority, Appellate Tribunal, or court, the proper officer is required to re-determine the tax under Section 73, these cases are also eligible for the waiver. 

Rule 164 of (CGST) Rules, 2017: Rule 164 of the Central Goods and Services Tax (CGST) Rules, 2017, introduced effective November 1, 2024, outlines the procedure and conditions for waiving interest, penalties, or both, related to tax demands under Section 73 of the CGST Act for the financial years 2017-18, 2018-19, and 2019-20. This provision aims to provide relief to taxpayers by allowing them to settle specific tax liabilities without the additional burden of interest and penalties.

GSTN advisory dated 08-11-2024: In this regard it is GSTN has informed 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. 

Reason for request for early appeal hearing to avail benefit under section 128A waiver of interest and penalties: 

1. The waiver is appliable for Section 73 cases and for the period 2017-18 to 2019-20. Iin almost all the case orders would have been issued (until otherwise there is stay) by Hon’ble Courts)  as the due date for issue of order under Section 73 for the said period is already expired.

2. In many of Orders issued, the demand is confirmed without proper verification of documents submitted and demand could be redetermined for lesser amount by the First Appellate Authority.

3. Similarly in the case of notice issued under Section 74, there may not be sufficient ground to prove suppression of facts to invoke the extended period and it may be pending with the First Appellate Authority.

4. An Appellate Authority (under Section 107), Appellate Tribunal (under Section 109), or a court may direct a reassessment of a tax liability when it determines that the criteria for fraud, suppression, or willful misstatement were not met, meaning that a case issued under Section 74 might need to be revisited as an ordinary tax recovery case.

5. Section 75 outlines procedures for tax determination, including circumstances where reassessment or re-determination is necessary based on directions from higher authorities. This can lead to a shift from Section 74-based assessments to Section 73 where the conditions of fraud or suppression are no longer relevant.

In view of the foregoing reasons, the Taxpayers can write to the Appellate Authority for early hearing to reap the benefits as per the provisions of Section 128 of CGST/SGST Act, 2017 read with Rule 164 of CGST/SGST Rules 2017. Draft letter for the said purpose is also enclosed.

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Draft letter for early hearing To avail benefit waiver of interest and penalties under section 128A CGST Act, 2017: 

In company letter head

Date…………

[Address of the First Appellate Authority]

[City, State, Pin Code] 

Respected Sir/Madam,

Subject: Appeal filed by M/s……………………. GSTN. No………………Request for Early Hearing of Appeal Filed Against Order passed by …………………..(designation and other details of the Adjudicating Authority) No. ………………. dated ………………

Reference: Order No. ………….. dated ……………..

Appeal ARN No/Ref No……………… dated ……………….

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We, M/s ………………………having principal place business at…………….and holder of GSTN No…………………………. respectfully submit that an appeal has been filed with your esteemed office against the order issued by……………………… [Issuing Authority] vide Order No. …………………. dated ………………… The appeal was filed under Appeal ARN No. ………………….. on …………………].

2. We kindly request an early hearing of the appeal on the grounds as we wish to avail the benefits of waiver of interest and penalties as per Section 128A of the CGST/SGST Act, 2017, read with Rule 164 of the CGST/SGST Rules, 2017. The waiver under these provisions would significantly alleviate the financial burden on our business, allowing us to comply promptly with the statutory dues.

3. We humbly request your kind consideration to expedite the hearing process in the interest of justice and to enable us to avail the benefits provided under the applicable provisions of the Act and Rules.

Thanking you for your consideration. 

Yours faithfully,

[Authorized Signatory Name]

[Designation]
[Company Name],

[Contact Information]

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(B.Venkateswaran IRS., Asst. Commissioner CGST (Retired), Coimbatore