Amnesty Provisions Under Section 128A W.R.T. Section 73 Demands

In the Budget 2024, a new Section 128A has been proposed by the Finance (No.2) Bill -2024. Under this section 128A, for certain financial years,  from 2017-18 to 2019-20 (i.e., from July 1, 2017, to March 31, 2020), if a tax is payable or created with respect to the Following :-

(a). A Notice issued under section 73(1) or a Statement has been issued under section 73(3) and order is not passed under section 73(9):- When under Section 73(1) a Notice is issued or A statement is issued under section 73(3) but still the order has not been passed under section 73(9) or

(b ). An order is passed under Section 73(9) but No order has order has been passed under Section 107 (11)- Appeal Order  or under section 108(1) – Revision Order or

(c). An order has been passed in an Appeal under section 107(11) or revision order under section 108(1) has been passed  but tribunal order under section 113(1) has not been passed:- In every case where an order has been passed under section 107(11) and Section 108(1) has been passed the order under section 113(1) is not practically possible since work at Tribunal is still not started.

In case of all these demands the dealer is only required to pay the tax only and the interest under section 50 and penalty imposed shall be waived , if the tax is paid up to a certain date , which will be notified by the Government as per the recommendation of the GST council .

This is a major relief in cases involving statements, notices, and orders issued under Section 73 i.e. in Non fraud cased.

Let us see the Initial Wordings of the Section 73 to make it clear where this Amnesty is applicable :-

Section 73 :- Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts.

Let us here make a List of eligible situations under the proposed section 128A :-

Type of Proceedings	Whether You can avail the benefits of Amnesty under section 128A
Notice issued under Section 73(1)	Yes
Statement issued under Section 73	Yes
Order issued under section 73(9)	Yes
Filed Appeal to Appellate Authority	Yes
Order issued by Appellate Authority	Yes
Appeal Filed to Appellate Tribunal*	Yes

*At Present No Appellate Tribunals are there.

IS IT AN AMNESTY SCHEME

Yes , practically it can be considered a type of amnesty scheme, under which if you have received a notice . statement or order  under Section 73, you will be exempted from interest and penalty. Let’s review what has been included in the Budget 2024 regarding this amnesty scheme through Finance (No.2) Bill – 2024.

If you have received a notice or statement or  under Section 73, or if you have received an order under this section, you have appealed against this order, and even if the appeal order has been issued, you can still take advantage of this amnesty. You only need to deposit the amount of tax , and that too before a date that the government will be notified. Along with this, all procedures related to this will be concluded under the conditions that will be declared by the Government later.

POVISIOS WITH SECTION 128A

Without provisos any section is not completed so this proposed section 128A has three provisos .

Let us have a Look at first proviso what it is saying :-

It is important to note that if a competent officer has issued a notice or order under Section 74(1), but it is not considered fraud, etc., in any appeal,  it will be considered under Section 73(1) as per the provisions given in Section 75 (2) and will also be covered under this amnesty. In such a case, you can also take advantage of this amnesty.

Let us see the exact wordings of the Proviso 1 to Section 128A

Provided that where a notice has been issued under sub- section (1) of section 74, 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 provisions of sub-section (2) of section 75, the said notice or order shall be considered to be a notice or order, as the case may be, referred to in clause or clause (b) of this sub-section:

Let us have a look at section 75(2) which is mentioned in First proviso of proposed Section 128A :-

Section 75(2):- Where any appellate authority or Appellate Tribunal or court concludes that the notice issued under sub-section (1) of Section 74 is not sustainable for the reason that the charges of fraud or any wilful mis-statement or suppression of facts to evade tax has not been established against the person to whom the notice was issued , the proper officer determine the tax payable by such dealer , deeming as if the notice were issued under sub-section (1) of section 73.

PROVISO 2 :- ADDITIONAL DEMAND AFTER CONCLUSION OF PROCEEDINGS

If additional demand is created in the conditions mentioned in the Proviso 2 (as reproduced below)  then the additional demand has to be paid within 30 days from the date of passing the order by Concerned  authorities. The conclusion of proceedings as mentioned in Section 128A(1)shall be subject to this Condition.  This is given in Second proviso of proposed section 128A. To make it clear Let us have a look at the Exact wording of the Proviso Second of section 128A.

Provided further that the conclusion of the proceedings under this sub-section, in cases where an application is filed under sub-section (3) of section 107 or under sub-section (3) of section 112 or an appeal is filed by an officer of central tax under sub-section (1) of section 117 or under sub-section (1) of section 118 or where any proceedings are initiated under sub-section (1) of section 108, against an order referred to in clause (b) or clause (c) or against the directions of the Appellate Authority or the Appellate Tribunal or the court referred to in the first proviso, shall be subject to the condition that the said person pays the additional amount of tax payable, if any, in accordance with the order of the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority, as the case may be, within three months from the date of the said order:

PROVISO 3:- NO REFUND IF INTEREST AND PENALTY ALREADY PAID

If interest and penalty have already been deposited in this regard, no refund will be given, as it is the norm in every amnesty scheme that previously deposited amounts are not refunded. This is given in Third proviso to proposed section 128A. This is clearly a discriminatory provision like any Amnesty scheme.

Let us See the Exact Wordings of Section 128A Proviso 3

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

NO AMNESTY FOR ERRONEOUS  REFUND

Section 128A(2)

The provisions of this amnesty will not apply to the amount payable due to refunds made in error to the person.

YOU HAVE TO WITHDRAW THE APPEAL

Section 128A(3)

If you have appealed in these cases, whether before the Appeal Authority or Tribunal (though it is currently not possible to appeal to the Tribunal) or court and it is still pending , you will have to withdraw this appeal before a certain date issued by the government to avail of this amnesty.

Let us see Section 128A(3) :-

Nothing in sub-section (1) shall be applicable in respect of cases where an appeal or writ petition filed by the said person is pending before Appellate Authority or Appellate Tribunal or a court , as the case may be , and has not been withdrawn by the said person on or before the date notified under sub-Section (1).

NO APPEAL AFTER THIS AMNESTY

If the amount is paid as per provisions of section 128A(1) as explained above and the proceedings are deemed to be concluded under the said sub-section , no appeal under section 107(2) or Section 112(1) shall lie against the said orders against which dealer has opted for amnesty under this Section 128A(1).

Note :-

If you see the Drafting of Section 128A of CGST  in Finance (No.2) Bill -2024  , you will find that there is drafting mistake in 128A(1)(c) and through  this drafting mistake has made all the orders passed under section 107(11) by the Appellate Authority and Orders under Section 108(1) by the Revisional Authority  came into this scheme irrespective of facts whether they are related to Section 73 or not ,  which is not the intention of the Legislature. Surely, they will correct it because this Amnesty is only applicable w.e.f. Section 73 Demands. Let us see how this clause (c ) has been correctly drafted by our Expert Group :- (c) :- an order passed under sub-section 11 of section 107 of sub-section (1) of section 108 “with respect to orders referred in clause (b)” where no order under sub-section (1) of section 113 has been passed.

Conclusion: The introduction of Section 128A in the Finance (No.2) Bill – 2024 is a strategic move to ease the burden on taxpayers involved in non-fraud cases under Section 73 of the CGST Act. By providing relief from interest and penalties, this amnesty scheme encourages compliance and resolution of pending disputes. Taxpayers should closely monitor the government’s notifications regarding the specific dates and conditions to fully benefit from this provision. For detailed guidance and personalized advice, consulting a tax professional is recommended.