Preface: The Section 128A waiver scheme, coupled with Rule 164, provides relief for interest and penalty demands under GST notices issued per Section 73, covering the period 01-07-2017 to 31-03-2020. Taxpayers must fully settle the tax liability and submit waiver applications within prescribed timelines. The scheme excludes cases involving erroneous refunds, unwithdrawn appeals, delayed return filings, or direct recoveries under Section 75(12). It applies to multiple notices with separate applications for each or a single application for multi-year orders. Withdrawal proof of appeals is mandatory, and no partial appeal withdrawals are allowed. Non-compliance with conditions or timelines, including payment of interest or penalties not covered by the waiver, may render the waiver void. The process includes filing forms such as SPL-01 or SPL-02, handling defect memos (SPL-03), and concluding with acceptance (SPL-05) or rejection (SPL-07). Transitional credits and penalties under Sections 73, 122, and 125 are included, but late fees and certain IGST dues are not. Appeals against rejection orders (SPL-07) are possible, but not for acceptance orders (SPL-05).
Waiver of Interest and Penalty Under Section 128A Read with Rule 164
A Birds Eye View
1. Waiver of interest and penalty applicable to notices/ demands under Section 73.
2. Demand should pertain to 01-07-17 to 31-03-2020.
3. Pay full tax, and claim waiver of interest and penalty for period covered.
4. N.A. to erroneous refund or where appeal not withdrawn.
5. N.A. to Interest on delayed filing of returns or 88B cases or Self assessed Liability {Direct recovery cases Sec.75(12)} as per circular 238/32/2024-GST. However, there is no legal backing in cases where notice issued under 73 for issues covered by 75(12).
6. No partial withdrawal of appeal/ issue allowed.
7. Multiple notice/ order, multiple applications. Single notice/order for multiple years, one application.
| 128A(1)(a) | Notice Stage | Pay tax Demand of Tax by 31-03-25. File waiver application within 3 months of 31-03-25. | SPL-01 (Pay DRC-03 before filing) |
| 128A(1)
(b) or (c) |
Order passed or In Appeal/Writ Stage | SPL-02 (Pay tax through ELR or DRC-03A in case DRC-03 is paid before filing) | |
| 12A(1) Proviso 1 |
74 converted to 73 in Appeal/Writ | Pay tax demand within 6 months order of redetermination u/s. 73 | Application in SPL-02 within 6 months of redetermination of tax u/s. 73 |
| 12A(1) Proviso 2 |
If Department goes in appeal | Pay additional tax demand within 3 months of order | If not done order in SPL-05 or SPL-06 will become void. |
| If Demand is Erroneous Refund+ other reason |
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| If Demand of Partial Amnesty Period and Partial Non Amesty Period |
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| If Demand includes 16(4) |
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| Appeal Withdrawal Proof | SPL-02 to be filed with proof of withdrawal of appeal (APL-01W). If order of withdrawal is pending then upload withdrawal order in 1 month of such order. | ||
| SPL-03 | Defect Memo | If PO not satisfied, he has to issue SPL-03 within 3 months from the date of receipt of application and give opportunity of being heard. | |
| SPL-04 | Reply to SPL-03 | Reply to Defect memo, within 1 month of SPL-03. | |
| SPL-05 | Acceptance | Order for Conclusion.
(SPL-01 case, no need to pass DRC-7) (SPL-02 case, ELR shall be modified) |
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| SPL-05 | Time Limit |
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| SPL-07 | Rejection Order | As above | |
| Appeal | SPL-05 Case | No appeal can be filed against order of acceptance. | |
| Appeal | SPL-07 case & appeal against it not filed within 107(1) | 1. If any original appeal which was withdrawn for filing the SPL-02, it shall be restored.
2. If there was no such original appeal, recovery will be initiated. |
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| Appeal | SPL-07 Case (Where SPL-01/02 was filed against notice/order for which no original appeal was filed) | 1. File APL-01 within timelines of 107(1). Check if pre-deposit required as per provisions.
2. Appeal can only be filed against subject matter of rejection of waiver and not on merits of original notice/order. 3. If appeal accepted, Appellate Authority will issue SPL-06 and modify ELR. 4. If appeal rejected, go in further appeal or accept the demand. |
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| Appeal | SPL-07 Case (Where SPL-02 was filed against notice/order for which appeal was filed & withdrawn) | 1. If appeal accepted, Appellate Authority will issue SPL-06 and modify ELR
2. If appeal against SPL-07 rejected, APL-04 will be issued. Original appeal which was withdrawn will be restored subject to undertaking in SPL-08 (within 3 months) that no further appeal against rejection order. |
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| Appeal | Writ Withdrawn and SPL-07 case. | No provision for restoration if SPL-07 passed. Only appeal can be filed against rejection order. | |
FAQ:
| Full tax paid before 128A insertion | Benefit of 128A available even if paid before demand notice/order. |
| Tax recovered from any other person | Will be considered as payment towards demand if recovery before the date of notification of 128A |
| Interest and Penalty paid or recovered | No refund No Adjustment |
| 128A applicable to notice/ orders under Sec. 73 only pertains to interest and/or penalty? | Yes. |
| 128A applicable to Interest on delayed filing of returns or 88B or Self assessed Liability. (Direct recovery cases Sec.75(12) | No as per circular, but no legal backing in cases where notice issued under 73 for issues covered by 75(12). If no notice under 73, benefit NA. |
| Partial Withdrawal | No. Full amount of tax demanded in the notice/order has to be paid. |
| IGST Dues | Covered under 128A |
| Transitional Credit matters | Covered under 128A |
| Late Fee | Not Covered |
| Penalties Covered under 128A | Penalties under Sec. 73, 122, 125 etc. issued under 73 covered. |
| Payment through Cash/Credit | Both option available except in cases of demand for RCM, Erroneous refund, ECO. |
| Import IGST dues covered | No. |
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Disclaimer: The above is synopsis of Section 128A read with Rule 164 and FAQ’s. Kindly refer the Act, Rule Circular for complete understanding.
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very nice explanation