GST Amnesty Scheme under Section 128A (Eligibility and Procedure)

[Vinay Goyal]

The 53^rd GST Council Meeting, as a trade facilitation measure, proposed the insertion of Section 128A in the 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, in cases where the taxpayer pays the full amount of tax demanded in the notice up to 31.03.2025.  This interest and/or penalty waiver scheme is popularly known as an Amnesty Scheme. The proposed Section 128A was inserted in the CGST Act, 2017 vide Finance (No. 2) Act, 2024. Notification 17/2024–Central Tax has made this Section effective from 1-11-2024.

 Sub-section 128A (1) provides the statutory basis for the scheme. It also provides who is eligible for the scheme and the eligibility conditions the applicant has to fulfill. Sub-Sections 128A (2) and (3) provide some exclusions from the scheme. Sub-Section 128A (5) prohibits further appeals where proceedings are deemed concluded in the scheme. 

The 54^th GST Council Meeting further recommended:

•  Insertion of Rule 164 in the CGST Rules, 2017 along with certain Forms to provide for terms & conditions to avail the benefit of Section 128A of the CGST Act.
• To notify 31.03.2025 as the date on or before which payment of tax shall be made to avail the benefit of Section 128A of the CGST Act.
•  Clarifications to be issued in connection with the availment of benefits under Section 128A of the CGST Act, by way of a circular.

Accordingly, the Government has notified the date on or before which payment is to be made vide Notification No. 21/2024 – Central Tax dated 08.10.2024 (discussed infra). The Government has also inserted the proposed Rule 164 vide Notification No. 20/2024 – Central Tax dated 08-10-2024 w.e.f. 01-11-2024. Rule 164 provides procedure to be followed along with terms and conditions. It also provides eight forms covering situations from initial application to conclusion. The proposed circular has not been issued yet.

Here is a topical analysis of the provisions for understanding.

Who is Eligible for Waiver of Interest and/ or Penalty

Section 128A (1) specifies the following three categories of persons as eligible persons for the waiver scheme:

Any person who is liable to pay a tax chargeable in accordance with

1. 1. A Show Cause Notice u/ss.  73 (1) or a statement u/ss. 73 (3),
   2. Adjudication Order u/ss. 73 (9), or
   3. An Order by the Appellate Authority under sub-section (11) of section 107 or sub-section (1) of section 108,

The first proviso of Section 128A (1) provides a fourth eligibility, and it covers the situation where the original notice was issued in Section 74 (1), but the proper officer has been directed under Section 75 (2) to re-determine tax in Section 73 (1).

Further Eligibility Conditions

1. The above Notice/ Order is for payment of tax for the period from 1st July 2017 to 31st March 2020.
2. The said person has paid the full amount of tax payable as per the notice or statement or the order before the notified date.

Last Dates

For Payment

The last dates for payment of tax have been notified vide Notification No. 21/2024 – Central Tax dated 08.10.2024 as follows.

1. The last date for payment of tax is 31.03.2025.

2. However, where the tax is to be re-determined u/s 73, instead of  Section 74, in pursuance to an order u/s 75 (2), the last date for payment would be the date ending on completion of six months from the date of issuance of the re-determination order by the proper officer under section 73.

For Application

The last dates for applying are provided under Rule 164 (6) as follows:

The last Date for filing an application for a waiver in ordinary cases is 30.06.2025. However, for re-determination cases as discussed above, it will be six months from the date of communication of the re-determination order by the proper officer under section 73.

Exclusions

This waiver scheme will not be applicable-

1. 1. 1. In respect of any amount payable on account of erroneous refund - Section 128A (2).
      2. Where an appeal or writ petition filed by the person is pending, and he has not withdrawn the same on or before the date notified under ss. 128(1) - Section 128A (3).

Benefit/Consequence

As per Section 128A(1), no interest and penalty shall be payable and the case will deemed to be concluded, subject to conditions as may be prescribed. Section 128 (4) prohibits further appeal against the concluded order.

Procedure

The procedure for applying and further proceedings is prescribed under Rule 164. This Rule has 17 Sub-Rules and 8 Forms. The 17 sub-rules are a mixture of procedure with further important conditions. For ease of reference, the matter can be examined step-wise as follows:

S No.	Process	Form	Rule	Comments/ Important Instructions
1	Application under Section 128A (1) (a)	GST SPL 01	164 (1)	This form is for waiver application in respect of a notice or Statement. [The author doubts there will be any such pending SCNs/ Statements u/s 73 for the period 01.07.2017 to 31.03.2020, as the same will have been already time-barred even before 01.011.2024, except when the notice refers to notice mentioned in Proviso of ss.128 (1), or when a notice already issued is stayed for adjudication under some court order] Table 7 of the GST SPL01 provides the documents and proofs which are required to be submitted. There are detailed instructions for filing in the form itself.
2	Application under Section 128A (1) (b) or (1) (c).	GST SPL 02	164 (2)	This form is for waiver applications where a demand order or order in appeal has been passed. Table 7 of the GST SPL01 provides the documents and proofs required to be submitted. There are detailed instructions for filing in the form itself.
3	Show Cause Notice (Where the proper officer believes that the application is liable to be rejected.)	GST SPL 03	164 (8)	It will state reasons why the application is liable to be rejected. It will state the short payment of tax, if any. It will also provide the date and time for a personal hearing in the GST SPL 03 itself.
4	Reply to Show Cause Notice	GST SPL 04	164 (9)	The Applicant may file a reply within one month. Along with the reply, supporting documents e.g. regarding payment of tax may be submitted.
5	Order for Conclusion of proceedings	GST SPL 05	164 (10)	It will be issued where the applications under SPL-01 or SPL-03 or Reply under SPL-03 are admitted/ allowed. In cases where show cause notice has not been issued within 3 months of application, the proper officer will be bound to issue conclusion order GST SPL -05 [ Rule 164 (13)(a)]. If a reply is received, this order is to be issued within 3 months of the reply. If no reply is submitted, this order is to be issued within four months of SCN. [ Rule 164 (13)(b)] If no order is issued within the aforesaid time-line, the proceedings will be deemed concluded. [ Rule 164(14)]
6	Order for Rejection of Application	GST SPL 07	Rule 164 (12)	It will be a speaking order containing details of the Application (SPL-01/ SPL-02), Show Cause Notice (GST SPL 03), and Reply to SCN (GST SPL 04), and the reasons for rejection. The reasons for rejection can be: Full payment not made, Payment made after the date notified in Section 128A, Notice/ Order about Sections other than Section 73. Appeal/ Writ Petition filed not withdrawn. Any other. It is an appealable order. In case no appeal is filed against this order of rejection, the appeal that was withdrawn for filing the waiver application shall be restored. [ Rule 164 (15) (a)]
6	Order passed by the proper officer, in cases where the initial application is rejected ( GST SPL-07), and on appeal by the applicant, the appellate authority allows the appeal)	GST SPL-06	164 (15) (b) (i)	It will contain References for GST SPL 01/ SPL -02, GST SPL-07, and GST APL-01. It also contains a rider that any incorrect declaration or suppression of facts will render this approval void and may lead to recovery proceedings.
8	Undertaking for restoration of Appeal which was withdrawn for applying in GST SPL 02	GST SPL 08	164 (15)(b)(ii)	It will contain the details of GST SPL 02, GST SPL 07, GST SPL 04, and the Appellate Authority’s Order against GST SPL 07, and undertaking that he would not file an appeal in the aforesaid rejection by the Appellate Authority.

Other Important Conditions.

1. Where the notice/order also partially contains a demand for an erroneous refund, the application will be filed after depositing the full amount of tax demanded. [Rule 164 (3)]
2. Where the period involved in the demand overlaps with a period other than covered in this scheme [FY 2017-18 to FY 2019-20], the application can be filed only after payment of the full amount demanded. [164 (4)]
3. The amount payable before the application shall be what remains after deducting the amount not payable in accordance with ss. 16(5), 16 (6). [164 (5)]
4. The application shall be accompanied by documents evidencing withdrawal of appeal/ petition if any. In case, the application has been filed but the order of withdrawal has not yet been issued, the applicant shall upload a copy of the application. The Applicant shall upload the order of withdrawal within one month of its issuance. [164 (7)]
5. If the Applicant does not file any appeal against a rejection order (GST SPL 07), the appeal, if any withdrawn for filing GST SPL 02, shall be restored. [Rule 164 (15)(a)]
6. In case, the applicant files the appeal against the rejection order, and the same is also rejected, his appeal which was withdrawn for filing the GST SPL 02 will be restored, subject to his undertaking in form GST SPL 08 within three months of the order rejecting an appeal against GST SPL 07. [Rule 164 (15)(b)(ii)].
7. 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 (i.e. in appeal or revision by the Revenue Department) 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.[ Rule 164 (16)]
8. Where the taxpayer is required to pay any amount of interest and/ or penalty in respect of any demand about erroneous refund or any demand about the period other than the period 01.07.2017 to 31.032020, 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 and/ or penalty within three months from the date of issuance of the said orders. If the amount is not paid within the said period, the waiver shall become void.

The Bottom Line

The scheme is prima facie useful to trade and industry. As the tax involved is to be deposited before applying, the applicant needs to carefully weigh where the demand against him legally stands and what are his stakes vis-à-vis interest and penalty. He also needs to examine his eligibility and fulfilment of conditions properly.  If the tax is due, the scheme is a very good relief from interest and/or penalty. 

Disclaimer: The article is only for information purposes and is not a legal opinion of any sort. The views, thoughts, and opinions expressed in the text belong solely to the author, and these are purely for educational purposes, not a substitute for actual legal provisions. For any query, the author can be reached at [email protected].

Discussions to this article

[Jai Shankar]

Dear Shri Goyalji: Wonderfully written and very informative.....have a question....where a dealer has been issued a DRC-07 final demand order and no appeal has been filed within 3 months from date of order....can such a dealer also opt for the Amnesty scheme?  Or is filing of appeal in such cases a pre-requisite?

[V Lakshmikumaran]

What is the meaning of notice issued under Section 73 for FY 2017-18, 2018-19 and 2019-20, when the timelines for passing of the orders for these FYs have lapsed already?  

[Vinay Goyal]

Reply To Shri Lakshmikumaran Sir : Sir, thanks for your precious time and nuanced reading.

[Vinay Goyal]

Reply to Shri Jai Shankar: Thanks for your appreciation Sir. Sir, Prima facie there seems to bar. But let us wait for Circular from the CBIC.

[Vinay Goyal]

Further Reply to Shri Jai Shankar:  Sir, there is no bar to filing an application if the appeal has not been filed. But the provisions talk of restoration of appeal and not extension of limitation for filing appeal. So I am of the view one should file the appeal then withdraw it, as a matter of abundant caution  in case his application is rejected.

(Even for withdrawing writ petition, if any, one may seek leave of the court for coming again on the same cause of action)

[Jai Shankar]

Shri Vinay Sir: Circular No. 238/32/2024-GST has been issued today - Clarification of various doubts related to Section 128A of the CGST Act, 2017 - no clarity on this aspect in the Circular.

We may have to rely on clarification provided in Para 4 (1) - "In this regard, it is to be mentioned that all such amount paid towards the said demand upto the date notified under sub-section (1) of section 128A, irrespective of whether the said payment has been done before Section 128A comes into effect, or after that, and irrespective of whether such payment was made before the issuance of the demand notice or demand order, or after that, shall be considered as paid towards the amount payable in sub-section (1) of Section 128A, as long as the said amount has been paid upto the date notified under sub-section (1) of section 128A and was intended to be paid towards the said demand." 

So any tax payment made till 31.03.2025 for the three years will count as intention to avail the scheme benefits even if formal appeal is not lodged within 3 months in cases where DRC-07 final orders are issued. This is my humble view as there are many dealers who have not acted in filing appeal against demand orders till date and Dept also has not enforced recovery action - basically these orders were in a state of limbo as far as tax payment/recovery action was concerned.