Various concerns were raised by businesses and field formations regarding the implementation of Section 128A of the Central Goods and Services Tax Act, particularly the waiver of interest or penalties for demands under Section 73 of the CGST Act relating to Financial Years 2017-18, 2018-19, and 2019-20.
The Ministry of Finance has released further clarifications and responses to frequently asked questions (FAQs) regarding the newly introduced Section 128A, which pertains to the GST Amnesty Scheme, easing pressure on professionals and businesses.
Read More: CBIC issues Clarification on Key Doubts on Section 128A of CGST Act
To address these issues and ensure consistent application of the law across all field formations, the Board, exercising its powers under Section 168(1) of the Central GST Act, issues the following clarifications and guidelines, the Ministry of Finance stated in a circular issued by the Central Board of Indirect Taxes and Customs (CBIC) on October 15, 2024.
Section 128A allows for the waiver of interest, penalty, or both for demands under Section 73 for certain tax periods. The provision applies to cases where notices or statements have been issued under Section 73 for FY 2017-18, 2018-19, and 2019-20, in the following scenarios:
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Additionally, if a case started under Section 74 but has been reclassified under Section 73 due to a court or authority’s direction, it is also covered under Section 128A for a waiver.
Taxpayers who receive a notice demanding tax for the period from July 2017 to March 2020 (where no order has yet been passed) can file an application electronically in FORM GST SPL-01 on the GST portal. Similarly, if an order has been passed under Section 73 but no further orders have been issued under Section 107 or 108, the taxpayer can file FORM GST SPL-02. The deadline to submit these forms is three months from the date specified under Section 128A, i.e., by 31st March 2025.
For taxpayers with multiple notices or orders, separate applications must be filed for each. Access the Draft Format by Clicking the link below.
S. 128A GST Penalty and Interest Waiver: Find Draft Format Here
The recent procedural updates regarding the processing of applications for the waiver of interest or penalties under Section 128A are expected to streamline the process significantly. As per the latest directions, the designated officer responsible for processing such waiver requests is clearly defined.
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For applications submitted using FORM GST SPL-01, the officer will also be the one to issue the final order under Section 73. In cases where FORM GST SPL-02 is filed, this officer will handle recovery under Section 79 of the Goods and Services Tax Act.
Upon receiving an application via either FORM GST SPL-01 or FORM GST SPL-02, the proper officer must conduct a thorough examination. If the application is deemed likely to be rejected, the officer is required to issue a notice in FORM GST SPL-03 on the common portal within three months of receiving the application. Additionally, applicants will be granted an opportunity for a personal hearing.
Upon receipt of the notice in FORM GST SPL-03, applicants have one month to respond electronically using FORM GST SPL-04. If the officer finds the applicant eligible for the waiver, they will issue an acceptance order in FORM GST SPL-05. Conversely, if the officer determines the applicant is ineligible, a rejection order will be issued in FORM GST SPL-07.
Timely issuance of these orders is critical, as stipulated by sub-rule (13) of rule 164. Should the officer fail to issue an order within this timeframe, the application will automatically be considered approved, with the approval order available on the common portal.
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Notably, if a waiver application submitted in FORM GST SPL-01 is approved, a summary order in FORM GST DRC-07 is unnecessary. However, approval of applications in FORM GST SPL-02 will modify any existing liabilities resulting from demand or appellate orders.
Moreover, it is crucial to highlight that, as outlined in the second proviso to sub-section (1) of Section 128A, any conclusions drawn from proceedings against a demand notice are contingent upon the payment of additional taxes as determined by relevant authorities within three months. Failure to remit these taxes will render the waiver void.
While reviewing applications, the proper officer must ensure the applicant has settled any tax demands outlined in the relevant notices. Waivers of interest or penalties are strictly applicable only to demands associated with the periods specified in sub-section (1) of Section 128A.
If any amounts related to interest and penalties are due for periods outside the stipulated time frame or due to erroneous refunds, the officer will detail these amounts in the respective forms. Applicants will have three months to settle any stated amounts post-issuance of the relevant orders, or else the waiver will become invalid.
In terms of appeals, no challenges can be made against orders concluding proceedings under Section 128A via FORM GST SPL-05. However, appeals against rejection orders (FORM GST SPL-07) are permitted and typically do not require pre-deposit, given prior tax dues have been addressed. Appeals will strictly focus on the waiver applicability rather than the merits of the original orders. Should an appellate authority determine that a waiver should have been granted, it will issue a revised order in FORM GST SPL-06, thus modifying any related liabilities accordingly.
In conclusion, Section 128A of the CGST Act provides a crucial opportunity for eligible taxpayers to obtain waivers on interest and penalties for specific financial years, provided their outstanding GST liabilities are cleared. The recent clarifications and procedural updates aim to streamline the application process, ensuring consistent and fair implementation across various field formations.
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Taxpayers must file their applications electronically using the prescribed forms (GST SPL-01 or SPL-02) and adhere to the timelines and conditions outlined. Proper officers are responsible for processing these applications and issuing timely orders, while taxpayers can appeal rejection decisions, focusing solely on the waiver’s applicability.
This scheme significantly eases the compliance burden on businesses, allowing them to regularise past liabilities with reduced financial penalties.
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