Waiver of Interest & Penalty for GST Demands for FY 2017-18 to 2019-20

Waiver of interest and penalty relating to demands raised under section 73 for FY 2017-18 to 2019-20

The Government, on the recommendation of GST Council, has inserted section 128A of CGST Act, 2017 to provide for waiver of interest and penalties demanded in notices and orders issued under Section 73 of the CGST Act for the FY 2017-18, 2018-19 and 2019-20 effective from 01-11-2024.

Applicability

Where any amount of tax is payable, except payable on account of erroneous refund, by a person chargeable with tax in accordance with –

1) notice issued under section 73(1) or a statement issued under section 73(3), and where no order under section 73(9) has been issued; or

2) order passed under section 73(9) and where no order under section 107(11) by Appellate Authority or section 108(1) by Revisional Authority has been passed;

3) order passed under section 107(11) by Appellate Authority or section 108(1) by Revisional Authority and where no order under section 113(1) by Appellate Tribunal has been passed, pertaining to the period from 01-07-2017 to 31-03-2020 or a part thereof.

In case where a notice was issued under section 74(1) and an order is passed or required to be passed by the proper officer in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court in accordance with the above provisions of section 75(2), the said notice or order shall be considered to be a notice or order, as the case may be, under section 73(1) or 73(9).

Note – Section 75(2) provides that where any Appellate Authority or Appellate Tribunal or court concludes that the notice issued under section 74(1) is not sustainable due to conditions to evoke section 74 are not fulfilled, the proper officer shall determine the tax payable by such person, deeming as if the notice were issued under section 73(1).

Conditions to avail the waiver –

A] Withdrawal of Appeal, if filed –

a) Where an appeal or writ petition filed by the person is pending, the same should be withdrawn by said person on or before notified date.

b) Application shall be accompanied by documents evidencing withdrawal of appeal or writ petition, if any, filed.

c) Where the applicant has filed an application for withdrawal of an appeal or writ petition filed but the order for withdrawal has not been issued by the concerned authority till the date of filing of the application, the applicant shall upload the copy of such application or document filed for withdrawal of the said appeal or writ petition along with the application

d) Upload the copy of the order for withdrawal of the said appeal or writ petition within one month of the issuance of the said order.

B] Payment of Tax [Notified Date]

a) Where a notice was issued under section 74(1) and an order is passed or required to be passed by proper officer in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court in accordance with the provisions of section 75(2), for determination of tax payable by the person, deeming as if notice were issued under section 73(1), said person pays  full amount of tax payable as per the order, on or before date ending on completion of 6 months from date of issuance of order by proper officer re-determining tax under section 73.

b) In other cases, the said person pays the full amount of tax payable as per the notice or statement or the order, on or before 31-03-2025

[Notification No.21/2024-Central Tax].

Points to remember –

1) Where notice or statement or order includes demand of tax, partially on account of erroneous refund and partially for other reasons, payment of the full amount of tax demanded in the said notice or statement or order, should be made on or before the notified date.

2) Where the notice or statement or order includes demand of tax, partially for the eligible period and partially for the other period, payment of the full amount of tax demanded in the said notice or statement or order, should be made on or before the notified date.

3) The amount payable shall be worked out after deducting the amount not payable in accordance with section 16(5) or section 16(6), from amount payable in terms of notice or statement or order under section 73. [Special Rectification process is prescribed vide Notification No.22/2024-Central Tax]

4) where an application is filed

a) by authorized officer under section 107(3) to Appellate Authority; or

b) by authorized officer under section 112(3) to Appellate Tribunal; or

c) by an officer of central tax under section 117(1) to High Court; or

d) by an officer of central tax under section 118(1) to Supreme Court; or

e) where any revisional proceedings are initiated under section 108(1), against an order or against the directions of the Appellate Authority or the Appellate Tribunal or the court as per section 75(2),

conclusion of proceedings shall be subject to condition that payment of  additional amount of tax payable, if any, as per order of Appellate Authority or Tribunal or court or Revisional Authority, within 3 months from date of order.

Similarly, the waiver of interest, or penalty, or both, as per the order issued in Form GST SPL-05 or Form GST SPL-06, if any, shall become void if such additional payment is not made within the time limit specified i.e. within 3 months from date of order.

Relief

a) No interest under section 50 and penalty under this Act shall be payable;

However, where such interest and penalty has already been paid, no refund of the same shall be available.

b) All the proceedings in respect of the said notice or order or statement, as the case may be, shall be deemed to be concluded, subject to such conditions as may be prescribed.

Condition –

Once amount has been paid and the proceedings are deemed to be concluded, no appeal under section 107(1) to Appellate Authority or under section 112(1) to Appellate Tribunal shall lie against an order against which waiver is claimed.

Application

1) Persons eligible for waiver in respect of notice under section 73(1) or statement under section 73(3), should file an application electronically in Form GST SPL-01;

2) Persons eligible for waiver in respect of orders issued, should file an application electronically in Form GST SPL-02;

3) Payment of taxes demanded should be done through DRC-03 in case waiver is in respect of notice or statement;

Payment of taxes demanded by order should be done only by crediting amount in the electronic liability register against debit entry created by the said order;

if the payment towards tax demanded has been made through Form GST DRC-03, an application in Form GST DRC-03A, shall be filed by the said person for credit of the said amount in the Electronic Liability Register against the debit entry created for the said demand, before filing the application.

4) Provide the details of the said notice or the statement or order, as the case may be, along with the details of the payments made.

Form GST SPL-01 and GST SPL-02 requires following details –

a) Table 1 – Basic Details as GSTIN, Name, Address, Jurisdiction etc.;

b) Table 2 – Details of Notice or Order as Number and date, whether appealed etc.;

c) Table 3 – Details of Demand and deduction on account of 16(5)/(6);

d) Table 4 – Details of Payments made through DRC-03 or crediting in electronic liability ledger against the demand debit entry.

Time Limit to apply

Any person who wishes to file an application may do so within a period of 3 months from the notified date;

Where a notice was issued under section 74(1) and an order is passed or required to be passed by proper officer in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court in accordance with the provisions of section 75(2), for determination of tax payable by the person, deeming as if notice were issued under section 73(1), said person who wishes to file an applicable may do so within 6 months from date of communication of order by proper officer re-determining tax under section 73.

Proper Officer for Order issue

The proper officer for issuance of order will be –

a) where the application for waiver of interest, or penalty, or both is made with respect to a notice or statement, shall be the proper officer for issuance of order as per section 73; and

b) where the application for waiver of interest, or penalty, or both, is made with respect to an order, shall be proper officer referred to in section 79.

Procedure on receipt of Application

1) Where proper officer is of view that the application made is liable to be rejected as not being eligible for waiver of interest, or penalty, or both, he will issue a notice to applicant in Form GST SPL-03 within 3 months from date of receipt of application and give applicant opportunity of being heard.

2) Applicant may file a reply to said notice in Form GST SPL-04, within a period of one month from the date of receipt of the said notice.

3) If proper officer is not satisfied with reply of applicant, proper officer shall issue an order in Form GST SPL-07 rejecting the said application.

4) If proper officer is satisfied that applicant is eligible for waiver of interest and penalty as per section 128A, he shall issue an order in Form GST SPL-05 accepting said application and concluding proceedings.

Time Limit to pass Order

The proper officer shall issue the order

A. In cases where notice in Form GST SPL-03 has not been issued, within a period of 3 months from the date of receipt of the application;

B. In cases where notice in Form GST SPL-03 has been issued,

a) Where reply of the applicant in Form GST SPL-04 is received within a period of 3 months from the date of receipt of reply

b) Where no reply is received from the applicant within a period of 4 months from the date of issuance of notice in Form GST SPL-03.

c) If no order is issued by the proper officer within the time limit specified application shall be deemed to be approved and the proceedings shall be deemed to be concluded.

Note –

In cases where withdrawal of appeal or writ petition, if any, needs to be attached to application, time period from date of filing of the application till the date of submission of the order for withdrawal of the appeal or the writ, as the case may be, shall not be included while calculating the time period.

Issue of Order

Where the order in Form GST SPL-05 is issued by the proper officer accepting the application and concluding the proceedings,

a) in respect of an application filed in Form GST SPL-01 pertaining to a notice or statement, summary of order in Form GST DRC-07 shall not be required to be issued by proper officer, in respect of said notice or statement;

b) in respect of an application filed in Form GST SPL-02 pertaining to an order, the liability created in the part II of Electronic Liability Register, shall be modified accordingly.

Effect of non-payment of Order Dues

Where the taxpayer is required to pay any amount of interest, or penalty, or both, in respect of any demand pertaining to erroneous refund or on account of demand pertaining to period other than eligible period; 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, or penalty, or both, within a period of 3 months from the date of issuance of the order.

Where the said amount is not paid within the said time period, the waiver of interest, or penalty, or both, under section 128A as per the order issued, shall become void.

Rejection Effects

In cases where Rejection Order in Form GST SPL-07 is passed and

A) No appeal is filed against the same within time period, the original appeal, if any, filed by the applicant and withdrawn for filing the application under section 128A, shall be restored.

B)  Appeal is filed against the same, and

a) appellate authority held that application has been wrongly rejected,

the appellate authority shall pass an order in Form GST SPL-06 accepting said application and concluding proceedings under section 128A; or

b) appellate authority has held that the application has been rightly rejected, the original appeal, if any, filed by the applicant and withdrawn for filing the application under section 128A, shall be restored,

subject to condition that the applicant files an undertaking in Form GST SPL-08, within a period of 3 months from the date of issuance of the order by the appellate authority in Form GST APL-04, that he has neither filed nor intends to file any appeal against the said order of the Appellate Authority.

Forms issued –

Conclusion –

Beneficial provision of waiver of interest and penalty will be effective from 01-11-2024 and benefit of the same for the FY 2017-18 to 2019-20 or part period thereof should be availed to clear the dues of the same period.

The views expressed in this article are author’s personal view as per his understanding of the provisions as they prevail today and it should not be construed as tax advice.