The finance ministry has announced the commencement date for filing under the GST Amnesty Scheme, which has been introduced through the insertion of Section 128A in the Goods and Services Tax (GST) Act.
This scheme is announced to provide relief to taxpayers, will come into effect from November 1, 2024, offering taxpayers an opportunity to waive interest and penalties on demands raised under Section 73 of the GST Act.
The 53rd GST council meeting has recommended the insertion of Section 128A for waiving the interest and penalty to the demands raised under Section 73 of the GST Act.
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Aiming to facilitate the trade and considering the difficulties in the implementation of GST, the government provides amnesty schemes, which also helps the business people to reduce their burden.
The press release of the 53rd GST Council recommendation stated that “Insertion of Section 128A in CGST Act, to provide for conditional waiver of interest or penalty or both, relating to demands raised under Section 73, for FY 2017-18 to FY 2019-20 : Considering the difficulties faced by the taxpayers, during the initial years of implementation of GST, the GST Council recommended, waiving interest and penalties for demand notices issued under Section 73 of the CGST Act for the fiscal years 2017-18, 2018-19 and 2019-20, in cases where the taxpayer pays the full amount of tax demanded in the notice upto 31.03.2025. The waiver does not cover demand of erroneous refunds. To implement this, the GST Council has recommended insertion of Section 128A in CGST Act, 2017.”
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It is important to note that the waiver does not extend to demands arising from erroneous refunds. The government has made it clear that erroneous refunds are outside the purview of this amnesty scheme.
Moreover, the scheme applies only to cases where the taxpayer has paid the tax in full by the stipulated date, ensuring the closure of the proceedings related to these demands. However, taxpayers who have already paid interest and penalties will not be eligible for any refunds of these amounts under the scheme.
The insertion of Section 128A is detailed in the Finance Act (No. 2) of 2024, which stipulates that the provision applies to tax demands raised via Section 73 notices for the period between July 1, 2017, and March 31, 2020. Specifically, Section 128A provides relief in cases where:
The taxpayer can settle these demands by paying the full amount of tax specified in the notice, statement, or order, provided the payment is made on or before the date notified by the government. Upon fulfilling this condition, the taxpayer will not be liable for any interest under Section 50 or penalties, and all proceedings related to these demands will be deemed closed, subject to any prescribed conditions.
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However, there are notable exceptions to the scheme:
Furthermore, the Act clarifies that once the proceedings are concluded under Section 128A, no appeals will be entertained against orders passed under Section 73 for the relevant period.
Businesses and taxpayers should carefully review their outstanding tax demands for the fiscal years 2017-18 to 2019-20 and assess their eligibility for the amnesty. Given the substantial relief offered under the scheme, many may find this an opportune moment to resolve any pending GST issues and avoid prolonged legal battles or further financial penalties.
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