Kerala State Goods and Services Tax (SGST) Department issued Circular No. 8/2025 on March 28, 2025, to clarify the implementation of the Interest Waiver Scheme under Section 128A of the KSGST Act. This scheme, based on the GST Council’s 53rd meeting recommendations, allows waiver of interest or penalties for specific demands under Section 73 of the GST Act for FY 2017–18 to 2019–20. However, it excludes cases involving interest due to delayed filing or reporting of self-assessed tax, which is governed by Section 75(12).
The circular provides detailed instructions for field officers handling applications involving mismatches between GSTR-1 and GSTR-3B, delayed return filings, and interest liabilities. If taxpayers wish to avail the waiver scheme, they must pay all applicable taxes by March 31, 2025, and apply through FORM GST SPL-02. Proper officers are required to verify payments and, if interest remains unpaid, issue an offline communication requesting payment within 15 days. Recovery of such interest will follow if no response is received.
Additionally, penalties imposed under Section 73 in mismatch cases, which fall outside its scope due to clarifications added later, should be reviewed and possibly withdrawn. Officers are instructed to follow uniform procedures, maintain a register for recoverable dues, and prepare for recovery actions once GST portal functionality is enabled. The directive aims to reduce tax disputes from the initial GST implementation period and ensure consistent handling across field formations.
Kerala
GST
State Goods & Services
Office of the Commissioner of the State Goods and Services Tax
Department, Tax Towers, Karamana, Tvpm. — 695002
SGST Policy Division
E-mail: cstpolicy.sgst@kkerala.ov.in Ph: 0471278 276
No. SGST/782/2025-PLC12
Circular No. 8/2025-Kerala SGST Date : 28-03-2025
Subject:- State GST Department, Kerala – Interest waiver scheme u der Section 128A – treatment of applications submitted for waiing of arrears – cases related to self-assessed tax and inter st implementation of uniformity in processing application u s instructions issued
1. The GST Council in its 53rd meeting held in June 202 had recommended providing for waiver of interest or penalty or both, relating to demands under section 73 of the GST Act pertai i ng to Financial Years 2017-18, 2018-19, and 2019-20, subject to ertain conditions. Based on the recommendations Section 128A ha, been inserted in the Kerala State Goods and Services Tax Act, 2017 (hereinafter referred to as the `KSGST Act’ or ‘the Act’) with, effect from 01.11.2024. The procedures for availing the benefit of the heme, method of filing application and the process flow by the proper officer have been described in Rule 164 of the KGST Rules, 2017.
2. The Central Board of Indirect Taxes and Customs, s, the recommendations of the Council, has issued a circular (Circular No. 238/32/2024-GST dated 15.10.2024) for clarifying various doubts related to the newly inserted Section 128A of the Act. In t e said circular in para 4.4, it is clarified that “the benefit of waiver of interest and penalty shall not be applicable in the cases where the inter st has been demanded on account of delayed filing of returns, or elayed reporting of any supply in the return, as such interest is rel ted to demand of interest on self-assessed liability and does not pertain to any demand of tax dues and is directly recoverable under sub-section (12) of section 75.”
3. As per sub-section 12 of Section 75 of the KSGST Act, “Notwithstanding anything contained in section 73 or section 74 or section 74A where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.” An explanation was also inserted into this sub-section w.e.f. 1st January, 2022.
- Explanation- For the purposes of this sub-section, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.
4. Various doubts have been received from the field officers on how to handle subject matters in the already issued section 73 demand order such as, demand confirmed for FORM GSTR-1 and FORM GSTR-3B differences, interest for delayed filing of returns/ delayed reporting of supplies in returns etc., if the taxpayer opts for amnesty under section 128A of the Act, as the above-referred circular clarifies that the present amnesty doesn’t cover these issues.
5. Even though the Act precisely stated that any amount of tax in accordance with the self-assessed returns remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79 of the Act, the field officers had proceeded to determine the tax liability under section 73 of the Act even when the liability was already self-assessed and declared by the taxpayer in their GSTR-1. These steps were taken in the initial years of the implementation of the Act and before the explanation was added to sub-section (12) of section 75 of the Act by the GST Council.
6. Now, in order to handle this situation in light of the Waiver Scheme announced under section 128A of the Act and by considering the queries and doubts in this regard in the field, in exercise of the powers conferred under sub-section (1) of Section 168 of the KSGST Act, the following instructions are issued to bring uniformity in handling hese issues in the field formations and also for compliance;
a. If a single demand order under Section 73 of the Act c vers multiple issues – such as GSTR-1 -GSTR-3B mismau hes, discrepancies in Input Tax Credit (ITC), the availment and utilization of blocked ITC, interest due on delayed payment of tax, TDS/TCS mismatches, E-way bill mismatches etc, the taxpayer seeking the waiver scheme must pay the demanded tax i n or before March 31, 2025, and subsequently file an application in FORM GST SPL-02 through the common portal.
b. In such cases , the proper officer must verify the application and the payments made through DRC-03 or against the outstding liability to confirm whether the taxpayer has fully paid t e tax demanded, including the demand related to GST 1-3B mismatches.
c. If the taxpayer has fully paid the tax demanded, including the demand related to GSTR1-3B mismatches, but not pa ,d the interest due on such payments and/or not paid the interest or the belated payment of tax, as the case may be, an offline communication after generating an RFN in the portal, shold be served to the taxpayer; intimating that as per Circular No. 238/32/2024-GST dated:15.10.2024 issued by Central Board of Indirect Taxes and Customs on the recommendations oft GST Council, the benefit of waiver of interest and penalty shall of be applicable in the cases where the interest has been demaned on account of delayed filing of returns, or delayed reporting of any supply in the return, as such interest is related to dem nd of interest on self-assessed liability and does not pertain o any demand of tax dues and if it will not be paid and communicated within 15 days of receipt of this intimation, the interest in lation to the above demand shall be recovered under sub-section (12) of section 75 in future.
d. If the taxable person pays the applicable interest in full on receiving the intimation, as required by Section 50 of the ct, and informs the proper officer, the officer shall is e an acknowledgment in DRC-04 after verifying the payment if the payment is made voluntarily through DRC-03), and proceed to process the application submitted in FORM GST SPL-02. Even if the payment of tax related to GSTR1-3B mismatches along with interest or interest for the belated payment of tax, as the case may be, is not made, the proper officer must proceed with the application and follow the procedures outlined in Rule 142B of the KSGST Rules, 2017 for the recovery of self-assessed tax along with interest and/or for the recovery of interest for the belated payment of self-assessed tax, as the case may be, on deploying the functionality in the GST Back Office Portal. For this purpose, all proper officers shall maintain a separate register for cases where tax and/or interest is to be demanded under sub-section (12) of Section 75 of the Act.
e. In the cases where penalties had been confirmed either under subsection (9) or sub-section (11) of Section 73 of the Act for nonpayment of tax and interest related to GSTR1-3B mismatches, despite Sub-section (12) of Section 75 explicitly states that any unpaid self-assessed tax, in whole or in part, or any unpaid interest on such tax, shall be recovered under the provisions of Section 79. As GSTR1-3B mismatch cases fall within the ambit of recoverable amount under section 79, provisions of sub-section (1) of Section 73 is not applicable. As the provisions of section 73 are not applicable, the penalty provisions under sub-section (9) or subsection (11) of that section are also irrelevant in these cases. However, since the explanation was introduced in sub-section (12) of section 75 much later, in certain cases, notices were issued and the penalty was imposed under section 73 of the Act. Now, in light of the explanations brought about by the Council, these cases may be proceeded as per the procedure envisaged under the law. That is, the amounts may be recovered with interest, and the penalty that could not have been imposed under the law, if it has been imposed, may be rectified or dropped.
f. The GST Council introduced the waiver scheme to reduce tax disputes and provide significant relief to taxpayers during the initial years of the implementation of the GST Act. Therefore, all proper officers shall consider applications positively and guide taxpayers in making payments and filing applications, to reuce GST arrears within each Taxpayer Services
Circle/Division/District.
g. Divisional Deputy Commissioners and distraction Commissioners within the Taxpayer Services Vertical hall compile a list of taxpayers from whom interest is recove able under Section 79 of the Act, but cannot currently be demaded due to the unavailability of the corresponding functionality the Back Office Portal.
h. It is also instructed that proper officers shall initiate recovery very proceedings under Section 79 of the Act for the above cases as soon as the module is deployed in the portal, without waiti for any further instructions in this regard.
i. Proper officers in the Taxpayer Services Vertical are also instructed to adhere strictly to the procedures and time lines specified in Rule 164 of the KGST Rules, 2017.
7. Difficulty, if any, in the implementation of the above instructions may please be brought to the notice of the undersigned.
AJIT PATIL
I A S COMMISSIONER
