B. Venkateswaran, IRS, Assistant Commissioner, CBIC (Retired)
Need for Extension of Deadline and Procedural Reforms in GST Appeal and Waiver Scheme
The recent amendment introduced through Notification No. 11/2025 – Central Tax dated 27-03-2025, brings significant changes to the GST appeal and waiver process. While the amendment aims to streamline the tax dispute resolution mechanism, practical challenges necessitate an extension of deadlines and procedural reforms, particularly concerning State GST cases, partial withdrawal of appeals, and procedural inefficiencies in tax administration.
Challenges in GST Appeal and Waiver Implementation
Constraints in Partial Withdrawal of Appeals Under GST
One of the significant challenges faced by taxpayers is the inability to withdraw appeals partially when the appeal involves multiple tax demands arising from different issues. For instance, a single appeal may encompass tax demands relating to:
– Ineligible Input Tax Credit (ITC) under Section 16(4) of the CGST Act, 2017.
– Late fee for non-filing or delayed filing of GSTR-9C.
– Other tax demands based on audit observations, mismatches, or classification disputes.
Under the current online GST portal framework, there is no provision to withdraw an appeal partially, allowing taxpayers to opt for withdrawal concerning one aspect while continuing to contest others. This results in a compliance dilemma where taxpayers are left with only two unfavourable choices:
Full Withdrawal of the Appeal: This would mean taxpayers lose the opportunity to challenge disputed demands, even when they have strong legal grounds to contest them.
Continuation of the Appeal in its Entirety: This results in taxpayers forfeiting the benefits of waiver schemes, such as the ones introduced in Budget 2024, which offer relief from penalties and interest upon withdrawal of appeals.
Although the CGST Act amendments permit partial withdrawal of appeals, the GSTN portal does not currently provide the necessary functionality to execute this in practice. This inconsistency between legislative provisions and the technological framework creates undue hardship for taxpayers and undermines the intended relief measures.
Erroneous Show Cause Notices (SCNs) Due to Data Entry Errors
In the past year, CBIC reported a substantial number of SCNs issued due to clerical errors in GST returns. Despite recognizing these mistakes, the adjudicating authorities often refuse to drop such cases.
- Many SCNs were system-generated due to mismatches in return data.
- Even though higher appellate forums have acknowledged these errors, lower authorities insist on confirming demands, creating unnecessary disputes.
- Expedited appeal disposals are crucial to prevent taxpayers from facing unwarranted liabilities.
Incorrect invocation of Section 74 in SGST Cases
A growing concern is the arbitrary invocation of Section 74, which pertains to tax fraud and suppression.
- Section 73 is meant for general tax demands, whereas Section 74 carries severe penalties and should be invoked only in cases of deliberate fraud.
- State GST authorities have misapplied Section 74 in multiple cases, leading to excessive penalties.
- Numerous High Court cases have been remanded due to improper classifications and denial of natural justice. However, these cases remain pending without resolution, and there is no provision in the GST portal to handle remand cases back to the adjudicating authorities.
- Clear guidelines are needed to ensure Section 74 is applied only in genuine fraud cases, reducing unnecessary litigation and financial burdens on taxpayers.
Deficiencies in Forms SPL-02 and APL-04 Causing Application Rejections
The GST portal lacks adequate integration of appeal-related data, leading to incorrect waiver application rejections.
- SPL-02 (Application for Special Amnesty or Waiver) does not have the required fields to reflect appellate decisions.
- The system only recognizes DRC-07 (demand order) but fails to capture APL-04 (Appellate Order), causing discrepancies.
Impact on Payment Recognition:
-
- Payments made as per APL-04 are not recognized, leading to false pending liability alerts.
- Since SPL-02 only reflects DRC-07, waiver applications may be wrongly rejected.
- GSTN must update its portal to include APL-04 details in SPL-02 to prevent wrongful rejections.
Screen shots as per GSTN Portal:
Selected appeal as filed as order has been received.
Warning message:
After warning message, if still want to continue the next button is disabled.:
If Taxpayers want to continue for the waiver scheme after the orders of Appellate Authority he has file incorrect application otherwise, he cannot file application for waiver scheme:
Until these issues are resolved, the deadline for waiver applications must be extended to protect taxpayers from procedural failures.
Need for Deadline Extension and Expedited Appeals
Given the compliance difficulties arising from this issue, the following corrective measures are necessary:
– Extension of the Deadline for Appeal Withdrawal: Until the GSTN portal is updated to facilitate partial withdrawals, an extension should be granted to allow taxpayers adequate time to make informed decisions.
– Enhancement of the GSTN Portal: Necessary modifications should be introduced to enable taxpayers to withdraw appeals partially, ensuring alignment with statutory provisions.
– Clarifications from CBIC and GST Council: A clear directive should be issued to ensure that tax authorities consider partial appeal withdrawals manually until the portal is updated.
– Failure to address this issue promptly may result in taxpayers being compelled to either forego legitimate benefits or face prolonged litigation, thereby defeating the objectives of taxpayer-friendly compliance measures.
Conclusion
While Notification No. 11/2025 enhances the GST framework, it exposes practical gaps that require urgent action:
1. GSTN systems must allow partial appeal withdrawals, or deadlines must be extended.
2. Erroneous SCNs due to data mismatches must be reconsidered, with officers instructed to drop invalid demands.
3. Misuse of Section 74 must be prevented, and pending cases must be disposed of promptly.
4. GSTN must resolve deficiencies in SPL-02 and APL-04 to prevent incorrect application rejections.
5. Deadline extensions for waiver scheme payments are essential to ensure fairness in tax administration.
Authorities are urged to take immediate steps to address these systemic flaws, ensuring that taxpayers receive fair treatment and compliance processes remain efficient and transparent.
Author Bio
Yes , it is need of time. Main thing, in state of Maharashtra, there was restructuring of appeal cases. In case of Wardha District, office of Nagpur was shifted to Chandrapur. Hence from July 2024 to Almost December 2024, cases were not heard. Transfer of cases was going on. So Appeal authority as well as Dealers got very less time to hear the case. In Wardha, many cases were almost ex-party. In those cases, officers need to devote more time. Hence this date shall be extended by almost 2 -3 Months