Background:
Section 128A was first announced in the 53rd GST Council meeting held on June 22, 2024. Thereafter, on July 23, 2024 in Budget 2024, it was introduced vide Section 142 of the Finance (No. 2) Act, 2024. Further, it is pertinent to note that the Officers’ Meeting held on July 21, 2024 held in the State of Andhra Pradesh raised the issue of – whether the payment of tax in proposed section 128A of the CGST Act also includes payment of cess. Co-joint reading of the proposed Section 128A of the CGST Act, along with Section 20 of the Integrated Goods and Services Tax Act, 2017 (“the IGST Act”) and Section 11 of GST (Compensation to States) Act, 2017 discusses that payment of tax under the proposed Section 128A of the CGST Act also covers cess.
Here, it is pertinent to note that, taxpayers may avail themselves of the benefit of the waiver of interest and penalty under Section 128A for the Financial Years 2017-18 to 2019-20, provided that the disputed tax and cess, as specified in demand notices issued under Section 73 of the CGST Act, are duly paid by them by 31st March, 2025.
The GST Council in its 54th meeting recommended a measure for facilitation of trade where procedure and conditions for waiver of interest or penalty or both, in respect of tax demands under section 73 of CGST Act for FYs 2017-18, 2018-19 and 2019-20 as per section 128A of CGST Act were discussed.
The GST Council recommended the insertion of Rule 164 in the Central Goods and Service Tax Rules, 2017 (“the CGST Rules”), along with certain Forms, providing for the procedure and conditions for availment of benefits in accordance with Section 128A of the CGST Act. However, Rule 164 of the CGST Rules is to be notified very soon by the Government.
The Council also recommended to notify March 31, 2025 as the date on or before which the payment of tax demanded must be paid by the registered persons, to avail the said benefit as per section 128A of the CGST Act.
The Council also recommended the issuance of a circular to clarify various issues related to availment of waiver of interest or penalty or both as per Section 128A of the CGST Act.
In furtherance of the above, the Ministry of Finance vide Notification No. 17/2024-Central Tax dated September 27, 2024 notified the dates for various provisions of the Finance (No. 2) Act, 2024 including Section 128A of the CGST Act w.e.f. November 01, 2024.
The CBIC vide Notification No. 21/2024–Central Tax dated October 08, 2024 notifies the respective date, as the date upto which payment for the tax payable as per the notice, or statement, or the order can be made by the class of registered person, which is as follows:
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Sl. No. |
Class of registered person |
Relevant Section 128A |
Date upto which payment for the tax payable |
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1. |
Registered persons to whom a notice or statement or order, referred to in clause (a) or clause (b) or clause (c) of section 128A of the CGST Act, has been issued. |
128A. (1) Notwithstanding anything to the contrary contained in this Act, where any amount of tax is payable by a person chargeable with tax in accordance with,––
(a) a notice issued under sub-section (1) of section 73 or a statement issued under sub-section (3) of section 73, and where no order under sub-section (9) of section 73 has been issued; or
(b) an order passed under sub-section (9) of section 73, and where no order under sub-section (11) of section 107 or sub-section (1) of section 108 has been passed; or
(c) an order passed under sub-section (11) of section 107 or sub-section (1) of section 108, and where no order under sub-section (1) of section 113 has been passed, pertaining to the period from 1st July, 2017 to 31st March, 2020, or a part thereof, and the said person pays the full amount of tax payable as per the notice or statement or the order referred to in clause (a), clause (b) or clause (c), as the case may be, on or before the date, as may be notified by the Government on the recommendations of the Council, no interest under section 50 and penalty under this Act, shall be payable and 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:
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March 31, 2025 |
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2. |
Registered persons to whom a notice has been issued under sub-section (1) of section 74, in respect of the period referred to in sub-section (1) of Section 128A of the said Act, 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, for determination of the tax payable by such person, deeming as if the notice were issued under sub-section (1) of section 73 of the said Act. |
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 (a) or clause (b) of this sub-section:
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: |
Date ending on completion of six months from the date of issuance of the order by the proper officer redetermining tax under Section 73 of the said Act.
For Example: Order is passed under Section 73 of the CGST Act on: 9-10-2024
Time limit: 6 months from the date of Order
Actual Due date of Payment of tax : 9-03-2025
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1. Registered Person to pay the full amount of tax payable as per the notice or statement or order as referred to in clause (a) or clause (b) or clause (c) of Section 128A of the CGST Act on or before March 31, 2025.
2. Adjudication order passed under Section 74 of the CGST Act, where the appellate authority or Tribunal or Courts have held that the demand is not sustainable under Section 74, but only under Section 73 and the Order is passed under Section 73(1) of the CGST Act. The Registered Person will be allowed to make the payment of tax within 6 months from the date of the Order.
3. However, the GST Council in its 54th meeting held on September 09, 2024, recommended the insertion of Rule 164 in the CGST Rules, along with certain Forms, providing for the procedure and conditions for availment of the benefit of waiver of interest or penalty or both, relating to tax demands under Section 73 of the CGST Act pertaining to FYs 2017-18, 2018-19 and 2019-20, as per Section 128A of CGST Act is still pending.
4. This Notification will be made effective from November 1, 2024. This means the Registered Person who has paid tax between November 01, 2024 to March 31, 2024 are allowed to avail the benefit of Section 128A.
5. There is no clarity about the past period that is before November 01, 2024, whereby the Registered Person has made full payment of tax but interest and penalty are in dispute.
Now:
The CBIC vide Notification No. 20/2024 – Central Tax dated October 08, 2024 after rule 163, the following rule shall be inserted with effect from the 1st day of November, 2024, namely: –
“164. Procedure and conditions for closure of proceedings under section 128A in respect of demands issued under section 73.–
(1) Any person who is eligible for waiver of interest, or penalty, or both in respect of a notice or a statement mentioned in clause (a) of sub-section (1) of section 128A, may file an application electronically in FORM GST SPL-01 on the common portal, providing the details of the said notice or the statement, as the case may be, along with the details of the payments made in FORM GST DRC-03 towards the tax demanded.
(2) Any person who is eligible for waiver of interest, or penalty, or both, in respect of orders mentioned in clauses (b) and (c) of sub-section (1) of section 128A, may file an application electronically in FORM GST SPL 02 on the common portal, providing the details of the said order, along with the details of the payments made towards the tax demanded:
Provided that the payment towards such tax demanded shall be made only by crediting the amount in the electronic liability register against the debit entry created by the said order:
Provided further that if the payment towards such tax demanded has been made through FORM GST DRC-03, an application in FORM GST DRC-03A, as prescribed in sub-rule (2B) of rule 142, 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 in FORM GST SPL 02.
(3) Where the notice or statement or order mentioned in sub-section (1) of section 128A includes demand of tax, partially on account of erroneous refund and partially for other reasons, an application under sub-rule (1) or sub-rule (2) may be filed only after payment of the full amount of tax demanded in the said notice or statement or order, on or before the date notified under the said sub-section.
(4) Where the notice or statement or order mentioned in sub-section (1) of section 128A includes demand of tax, partially for the period mentioned in the said sub-section and partially for the period other than that mentioned in the said sub-section, an application under sub-rule (1) or sub-rule (2) may be filed only after payment of the full amount of tax demanded in the said notice or statement or order, on or before the date notified under the said sub-section.
(5) The amount payable under sub-rule (1) or sub-rule (2) shall be the amount that remains payable, after deducting the amount not payable in accordance with sub-section (5) or sub-section (6) of section 16, from the amount payable in terms of the notice or statement or order under section 73, as the case may be.
(6) Any person who wishes to file an application under sub-rule (1) or sub-rule (2), may do so within a period of three months from the date notified under sub-section (1) of section 128A: Provided that where an application in FORM GST SPL-02 is to be filed in cases referred to in the first proviso to sub-section (1) of section 128A, the time limit for filing the said application shall be six months from the date of communication of the order of the proper officer redetermining such tax under section 73.
(7) The application under sub-rule (1) or sub-rule (2) shall be accompanied by documents evidencing withdrawal of appeal or writ petition, if any, filed before any Appellate Authority, or Tribunal or Court, as the case may be, to establish that the applicant is eligible for the waiver of interest or penalty or both, in terms of section 128A:
Provided that where the applicant has filed an application for withdrawal of an appeal or writ petition filed before the Appellate Authority or Appellate Tribunal or a court, as the case may be, but the order for withdrawal has not been issued by the concerned authority till the date of filing of the application under sub-rule (1) or sub-rule (2), 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 under sub-rule (1) or sub-rule (2), and shall upload the copy of the order for withdrawal of the said appeal or writ petition on the common portal, within one month of the issuance of the said order for withdrawal by the concerned authority.
(8) Where the proper officer is of the view that the application made in FORM GST SPL-01 or FORM GST SPL-02 is liable to be rejected as not being eligible for waiver of interest, or penalty, or both, as per section 128A, he shall issue a notice on the common portal to the applicant in FORM GST SPL-03 within three months from the date of receipt of the said application and shall also give the applicant an opportunity of being heard.
(9) On receiving the notice under sub-rule (8), the applicant may file a reply to the said notice on the common portal in FORM GST SPL-04, within a period of one month from the date of receipt of the said notice. (10) If the proper officer is satisfied that the applicant is eligible for waiver of interest and penalty as per section 128A, he shall issue an order in FORM GST SPL-05 on the common portal accepting the said application and concluding the proceedings under section 128A.
(11) In cases where the order in FORM GST SPL-05 is issued by the proper officer under sub-rule (10).–
(a) in respect of an application filed in FORM GST SPL-01 pertaining to a notice or statement referred to in clause (a) of sub-section (1) of section 128A, the summary of order in FORM GST DRC-07 as per sub-rule (5) of rule 142 shall not be required to be issued by the proper officer, in respect of the said notice or statement;
(b) in respect of an application filed in FORM GST SPL-02 pertaining to an order referred to in clause (b) or clause (c) of sub-section (1) of section 128A, the liability created in the part II of Electronic Liability Register, shall be modified accordingly.
(12) If the proper officer is not satisfied with the reply of the applicant, the proper officer shall issue an order in FORM GST SPL-07 rejecting the said application.
(13) (a) In cases where notice in FORM GST SPL-03 has not been issued, the proper officer shall issue the order under sub-rule (10) within a period of three months from the date of receipt of the application in FORM GST SPL-01 or FORM GST SPL-02, as the case may be.
(b) In cases where notice in FORM GST SPL-03 has been issued, the proper officer shall issue the order in sub-rule (10) or sub-rule (12) within a period of three months from the date of receipt of reply of the applicant in FORM GST SPL-04, or within a period of four months from the date of issuance of notice in FORM GST SPL-03 where no reply is received from the applicant. Explanation.– For the purposes of this sub-rule, in cases referred to in the proviso to sub-rule (7), the time period from the date of filing of the application under sub-rule (1) or sub-rule (2) 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 under clause (a) or clause (b) of this sub-rule.
(14) If no order is issued by the proper officer within the time limit specified in sub-rule (13), then the application in FORM GST SPL-01 or FORM GST SPL-02, as the case may be, shall be deemed to be approved and the proceedings shall be deemed to be concluded.
(15) (a) In cases where no appeal is filed against the order in FORM GST SPL-07 within the time period specified in sub-section (1) of section 107, the original appeal, if any, filed by the applicant against the order mentioned in clause (b) or clause (c) of sub-section (1) of section 128A, and withdrawn for filing the application in FORM GST SPL-02 in accordance with sub-section (3) of section 128A, shall be restored.
(b) In cases where an appeal is filed against the order in FORM GST SPL-07 for rejection of application for waiver of interest, or penalty, or both, if—
(i) the appellate authority has held that the proper officer has wrongly rejected the application for waiver of interest, or penalty, or both, in FORM GST SPL-07, the said appellate authority shall pass an order in FORM GST SPL-06 on the common portal accepting the said application and concluding the proceedings under section 128A; or
(ii) the appellate authority has held that the proper officer has rightly rejected the application for waiver of interest, or penalty, or both, in FORM GST SPL-07, the original appeal, if any, filed by the applicant against the order mentioned in clause (b) or clause (c) of subsection (1) of section 128A, and withdrawn for filing the application in FORM GST SPL-02 in accordance with sub-section (3) of section 128A, shall be restored, subject to condition that the applicant files an undertaking electronically on the portal in FORM GST SPL-08, within a period of three 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.
(16) In cases where the taxpayer is required to pay an additional amount of tax liability as per the second proviso to sub-section (1) of section 128A, and such additional payment is not made within the time limit specified in the said proviso, the waiver of interest, or penalty, or both, under the said section as per the order issued in FORM GST SPL-05 or FORM GST SPL-06, if any, shall become void.
(17) In cases 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 the period other than the period mentioned in sub-section (1) of section 128A, 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 three months from the date of issuance of the order in FORM GST SPL-05 or FORM GST SPL-06, as the case may be, and 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 in FORM GST SPL-05 or FORM GST SPL-06, shall become void.
Explanation.– For the purposes of this rule, the proper officer for issuance of order under this rule,–
(a) in cases where the application for waiver of interest, or penalty, or both is made with respect to a notice or statement mentioned in clause (a) of sub-section (1) of section 128A, shall be the proper officer for issuance of order as per section 73; and
(b) in cases where the application for waiver of interest, or penalty, or both, is made with respect to an order mentioned in clause (b) or clause (c) of sub-section (1) of section 128A, shall be the proper officer referred to in section 79 of the Act.”
Forms:
- FORM GST SPL – 01 [See rule 164(1)] for Application for waiver of interest or penalty or both under section 128A in respect of a notice or a statement mentioned in clause (a) of sub-section (1) of the said section
- FORM GST SPL -02 [See rule 164(2)] for Application for waiver of interest or penalty or both under section 128A, in respect of an order mentioned in clause (b) or clause (c) of sub-section (1) of the said section
- FORM GST SPL -03 [See rule 164(8)] for Notice in response to an application filed under Section 128A
- FORM GST SPL-04 [See rule 164(9)] for Reply to notice issued under rule 164(8)
- FORM GST SPL -05 [See rule 164 (10)] for Order for conclusion of proceedings as per section 128A
- FORM GST SPL -06 [See Rule 164 (15)(b)(i)] for Order for conclusion of proceedings as per section 128A
- FORM GST SPL -07 [See rule 164(12)] for Order for Rejection of Application submitted under section 128A
- FORM GST SPL -08 [See rule 164(15)(b)(ii)] for Undertaking submitted under rule 164(15)(b)(ii)
Our Comments:
Amnesty scheme is a significant step in facilitating trade by providing relief to registered persons with pending tax demands, provided they settle the outstanding tax liabilities by March 31, 2025.
The notification highlights the introduction of Rule 164 in the CGST Rules, which details the procedure for availing this benefit. It establishes that taxpayers can electronically file applications through prescribed forms (SPL-01, SPL-02) and ensures that tax demands under Section 73 (including cess) are conclusively settled without attracting interest or penalties.
This amnesty also extends to cases where notices under Section 74 were issued, but adjudication resulted in a determination under Section 73. Importantly, the notification sets out clear timelines and procedures, including the requirement to withdraw appeals and seek credits for previously made tax payments.
However, clarity is still needed on whether taxpayers who made full payments of tax before November 1, 2024, can also avail of the benefits, leaving a potential gap for earlier settlements. The timely implementation of Rule 164 and resolution of pending procedural concerns will be crucial in ensuring the smooth execution of this relief measure.
The Notification along with the Complete Forms can be accessed at: https://a2z-bucket.s3.ap-south-1.amazonaws.com/CBIC_notified_the_Central_Goods_and_Services_Tax_%28Second_Amendment%29_Rules%2C_2024..pdf