To err is human — and let’s not forget it.[1]
In July 2017, the introduction of GST was a massive radical shift in the indirect tax regime of India. The initial phase was full of a flurry of notifications and sudden changes. Taxpayers as well as tax professionals, from a metropolis to a remote town, braced up to the challenge and adapted to the transition as quickly as possible. Yet, mistakes do happen when everything is in flux. Teething troubles and technical glitches do happen when a new taxation regime is introduced. Errors of understanding do happen when things are implemented in a real-time. As a trade facilitation measure, the 53rd GST Council Meeting proposed the insertion of a new Section in the CGST Act for conditional waiver of interest and /or penalty relating to initial years from FY 2017-18 to FY 2019-20. This interest/penalty waiver scheme is popularly known as an Amnesty Scheme. The scheme pertains to demands under Section 73 only. This article discusses the relevant issues alongside the legal provisions so that the issues can be handled professionally.
The Provisions
The Section 128A proposed in the 53rd GST Council Meeting was inserted in the CGST Act, 2017 vide Finance (No. 2) Act, 2024. Further, the Notification 17/2024–Central Tax has made this Section effective from 1-11-2024.
The 54th GST Council Meeting recommended:
- Insertion of Rule 164 in the CGST Rules, 2017 along with certain Forms to provide for terms & conditions to avail the benefit of Section 128A of the CGST Act.
- To notify 31.03.2025 as the date on or before which payment of tax shall be made to avail the benefit of Section 128A of the CGST Act.
- Clarifications to be issued in connection with the availment of benefits under Section 128A of the CGST Act, by way of a circular.
Accordingly, the Government has now inserted the proposed Rule 164 vide Notification No. 20/2024 – Central Tax dated 08-10-2024. This Rule is going to be effective from 01-11-2024. Rule 164 provides a procedure to be followed along with terms and conditions. The Government has also notified the date on or before which payment is to be made (discussed infra) vide Notification No. 21/2024 – Central Tax dated 08.10.2024, the Government. The proposed circular has not been issued yet.
Who is Eligible for Waiver of Interest and/ or Penalty
Section 128A (1) specifies the following three categories of persons as eligible persons for the waiver scheme:
Any person who is liable to pay a tax chargeable in accordance with
a. A Show Cause Notice u/ss. 73 (1) or a statement u/ss. 73 (3),
b. Adjudication Order u/ss. 73 (9), or
c. An Order by the Appellate Authority/ Revisionary Authority under Section 107 (11) or Section 108 (1).
The first proviso of Section 128A (1) provides a fourth eligibility, for it covers the situation where the original notice was issued in Section 74 (1), but the proper officer has been directed under Section 75 (2) to re-determine tax in Section 73 (1).
Further Eligibility Conditions
(A) The Notice/ Order is for payment of tax for the period from 1st July 2017 to 31st March 2020.
(B) The said person has paid the full amount of tax payable as per the notice or statement or the order before the notified date.
Limitation
Limitation For Payment
The last dates for payment of tax have been notified vide Notification No. 21/2024 – Central Tax dated 08.10.2024.
(1) The last date for payment of tax is 31.03.2025.
(2) However, where the tax is to be re-determined u/s 73, instead of Section 74, in pursuance to an order u/s 75 (2), the last date for payment would be the date ending on completion of six months from the date of issuance of the re-determination order by the proper officer under section 73.
Limitation For Filing Application
The Rule 164 (6) species the last dates for applying under the scheme. The last Date for filing an application for a waiver in ordinary cases is 30.06.2025. For re-determination cases as discussed above, it will be six months from the date of communication of the re-determination order by the proper officer under section 73.
Exclusions
This waiver scheme is not applicable-
1. In respect of any amount payable on account of erroneous refund [Section 128A (2)].
2. Where an appeal or writ petition filed by the person is pending, and the applicant has not withdrawn the same. [Section 128A (3)].
Benefit/Consequence
Once the case is deemed concluded, no interest and penalty shall be payable [Section 128A (1)]. However, this will be subject to conditions as may be prescribed. Section 128 (4) prohibits further appeal against the concluded order.
Procedure
The procedure for filing a waiver application and for further proceedings is prescribed under Rule 164. This Rule has 17 Sub-Rules and 8 Forms. The 17 sub-rules are a mixture of procedure with further important conditions. For ease of reference, the matter can be examined step-wise as follows:
| S No. | Process | Form | Rule | Comments/ Important Instructions |
| 1 | Application under Section 128A (1) (a) | GST SPL 01 | 164 (1) | 1. This application is for a waiver in respect of a notice or Statement.
[The author doubts there will be any such pending SCNs/ Statements u/s 73 for the period 01.07.2017 to 31.03.2020, as the same will have been already time-barred even before 01.011.2024, except when the notice refers to notice mentioned in Proviso of ss.128 (1), or when a notice already issued is stayed for adjudication under some court order] 2. Table 7 of the GST SPL01 provides the documents and proofs which are required to be submitted. There are detailed instructions for filing in the form itself. |
| 2 | Application under Section 128A (1) (b) or (1) (c). | GST SPL 02 | 164 (2) | 1. This application is for a waiver where a demand order or order in appeal or revision has been passed.
2. Table 7 of the GST SPL01 provides the documents and proofs required to be submitted. There are detailed instructions for filing in the form itself. |
| 3 | Show Cause Notice
(Where the proper officer believes that the application is liable to be rejected.) |
GST SPL 03 | 164 (8) | 1. It will state reasons why the application is liable to be rejected.
2. It will state the short payment of tax, if any. 3. It will also provide the date and time for a personal hearing in the GST SPL 03 itself. |
| 4 | Reply to Show Cause Notice | GST SPL 04 | 164 (9) | 1. The Applicant may file a reply within one month.
2. Along with the reply, supporting documents e.g. tax payment details may be submitted. |
| 5 | Order for Conclusion of proceedings
|
GST SPL 05 | 164 (10) | 1. It will be issued where the applications under SPL-01 or SPL-03 or reply under SPL-03 are admitted/ allowed.
2. In cases where show cause notice has not been issued within 3 months of application, the proper officer will be bound to issue conclusion order GST SPL -05 [ Rule 164 (13)(a)]. 3. If a reply is received, this order is to be issued within 3 months of the reply. If no reply is submitted, this order is to be issued within four months of SCN. [ Rule 164 (13)(b)] 4. If no order is issued within the aforesaid time-line, the proceedings will be deemed concluded. [ Rule 164(14)] |
| 6 | Order for Rejection of Application | GST SPL 07 | Rule 164 (12) | 1. It will be a speaking order containing details of the Application (SPL-01/SPL-02), Show Cause Notice (GST SPL 03), and Reply to SCN (GST SPL 04), and the reasons for rejection.
2. The reasons for rejection can be: i. Full payment not made, ii. Payment made after the date notified in Section 128A, iii. Notice/ Order about Sections other than Section 73. iv. Appeal/ Writ Petition filed not withdrawn. v. Any other. 3. It is an appealable order. In case no appeal is filed against this order of rejection, the appeal that was withdrawn for filing the waiver application shall be restored. [ Rule 164 (15) (a)] |
| 6 | Order passed by the proper officer, in cases where the initial application is rejected ( GST SPL-07), and on appeal by the applicant, the appellate authority allows the appeal. | GST SPL-06 | 164 (15) (b) (i) | 1. It will contain References for GST SPL 01/ SPL -02, GST SPL-07, and GST APL-01.
2. It also contains a rider that any incorrect declaration or suppression of facts will render this approval void and may lead to recovery proceedings. |
| 8 | Undertaking for restoration of Appeal which was withdrawn for applying in GST SPL 02 | GST APL 08 | 164 (15)(b)(ii) | It will contain the details of GST SPL 02, GST SPL 07, GST SPL 04, and the Appellate Authority’s Order against GST SPL 07, and an undertaking that he would not file an appeal against the aforesaid rejection by the Appellate Authority. This undertaking is to be given within three months of the order rejecting an appeal against GST SPL 07 |
Other Important Conditions.
- Where the notice/order also partially contains a demand for an erroneous refund, the application will be filed after depositing the full amount of tax demanded. [Rule 164 (3)]
- Where the period involved in the demand overlaps with a period other than covered in this scheme [FY 2017-18 to FY 2019-20], the application can be filed only after payment of the full amount demanded. [164 (4)]
- The amount payable before the application shall be what remains after deducting the amount not payable in accordance with ss. 16(5), 16 (6). [164 (5)]
- The application shall be accompanied by documents evidencing withdrawal of appeal/ petition if any. In case, the application has been filed but the order of withdrawal has not yet been issued, the applicant shall upload a copy of the application. The Applicant shall upload the order of withdrawal within one month of its issuance. [164 (7)]
- 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 (i.e. in appeal or revision by the Revenue Department) 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.[ Rule 164 (16)]
- Where the taxpayer is required to pay any amount of interest and/ or penalty in respect of any demand about erroneous refund or any demand about the period other than the period 01.07.2017 to 31.032020, 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 and/ or penalty within three months from the date of issuance of the said orders. If the amount is not paid within the said period, the waiver shall become void.
The Bottom Line
The scheme is prima facie useful to trade and industry and would ameliorate interest and penalty burden in suitable cases. Nevertheless, as the tax involved is to be deposited before applying, the applicant needs to carefully weigh where the demand against him legally stands and what are his stakes vis-à-vis interest and penalty. He also needs to examine his eligibility and fulfilment of conditions properly. If the tax is due, the scheme is a very good relief from interest and/or penalty.
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Disclaimer: The article is only for information purposes and is not a legal opinion of any sort. The views, thoughts, and opinions expressed in the text belong solely to the author, and these are purely for educational purposes, not a substitute for actual legal provisions. For any query, the author can be reached at [email protected].
[1] Credit: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2842843/
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