NEW GST AMNESTY SCHEME

[Veenaa Venkatesh]

The recent insertion of Section 128A in the CGST Act, seeking to provide relief by way of waiving interest and penalty in cases of pending disputes has definitely caught every taxpayer’s attention. To align with the recommendations made during the council meeting, a detailed Circular[1] has been issued clarifying certain doubts with regard to the eligibility under the scheme. Although special care seems to have been taken in addressing the probable issues, there are some concerns which require further clarity. Through this article, a few such open issues are sought to be highlighted:

First and foremost, the status of the pre-deposit made while filing the appeal which has to be withdrawn before filing the application under the amnesty scheme is unclear.

While it may be plausible to take a view that the said amount can be adjusted against the demand and the balance shall be paid at the time of filing the application, it is pertinent to note the usage of the words ‘full amount of tax payable as per the notice/ statement/ order’ in Section 128A.

The question that arises is whether the pre-deposit amount paid which has not been attributed to tax, can be considered as tax paid upon withdrawal of the appeal for the purpose of claiming the benefit under the scheme. Should a prudent tax payer who wishes to settle his case under the said scheme, pay the entire tax demand and claim refund of this pre-deposit through a separate application so as to ensure that he is not deprived of the benefit he is entitled to otherwise? 

Thus clarity is sought especially in view of decisions noting that output tax and pre-deposit cannot be equated.

Secondly, Rule 164(4) read along with the Circular specifically states that in the event where a notice/ statement/ order has been issued for multiple periods including a period not covered under Section 128A, the taxpayer ought to pay the entire tax demand (including the tax demand for the period not covered in the scheme) before filing the application. Further, it is also mentioned that the interest and penalty relating to the period not covered ought to be paid within a stipulated time after issuance of order[2], failing which the order waiving interest and penalty is deemed to be void.

The sanctity of the above Rule as well as the clarification requires re-evaluation particularly in light of the recent decision in the matter of M/s. Veremax Technologie Services Limited[3] wherein the Hon’ble Karnataka High Court has held that the practice of issuing a single, consolidated show cause notice for multiple assessment years contravenes the provisions of the CGST Act and established legal precedents.

Clarity on the above issues would be a welcome relief for the taxpayers to evaluate the benefit of the scheme and also to ensure that the intended purpose is achieved.

(The views expressed in this Article is strictly personal)

xxxxx

[1] Circular No. 238/32/2024-GST dated 15-10-2024

[2] Form GST SPL-05 or Form GST SPL-06

[3] M/S. VEREMAX TECHNOLOGIE SERVICES LIMITED VERSUS THE ASSISTANT COMMISSIONER OF CENTRAL TAX BENGALURU. - 2024 (9) TMI 1347 - KARNATAKA HIGH COURT