UNDERSTANDING AMNESTY FOR WAIVER OF INTEREST / PENALTY U/S 128A OF GST LAW (Part-1)

[Dr. Sanjiv Agarwal]

Law, Scheme and Conditions

Finance (No.2) Act, 2024 had inserted a new Section 128A in the CGST Act so as to provide for a conditional waiver of interest and penalty in respect of demand notices issued under section 73 of the said Act for the Financial Years 2017-18, 2018-19 and 2019-20, except the demands notices in respect of erroneous refund. In cases where interest and penalty have already been paid in respect of any demand for the said financial years, no refund shall be admissible for the same.

This new Section 128A provides for a conditional waiver of interest and penalty in respect of demands pertaining for financial years 2017-18, 2018-19 and 2019-20, in cases where demand notices have been issued under section 73 and full tax liability is paid by the taxpayer before a date to be notified.

Section 128A is applicable w.e.f. 01.11.2024 to provide for waiver of interest or penalty or both, relating to demands under section 73 of the CGST Act pertaining to Financial Years 2017-18, 2018-19 and 2019-20, subject to certain conditions. Rule 164 has been inserted in the CGST Rules, 2017 with effect from 01.11.2024 vide notification No.20/2024-Central tax dated 8th October 2024, providing for procedure and conditions for closure of proceedings under Section 128A of CGST Act.

Vide Notification No. 21/2024-Central tax dated 8th October 2024,  the date of 31.03.2025 has been notified under sub-section (1) of section 128A of CGST Act as the date on or before which the full payment of tax demanded in the notice/ statement/ order needs to be made by the taxpayer in order to avail the benefit of waiver of interest or penalty or both.  Further, for cases where the application is made as per the first proviso to section 128A(1) of CGST Act, the date on or before which the full payment of tax demanded in the order issued by the proper officer re-determining the tax under section 73 of CGST Act needs to be made by the taxpayer, has been notified as six months from the date of issuance of such order by the proper officer re-determining the tax under section 73 of CGST Act.

Waiver Scheme u/s 128A

Section 128A of contains a non-obstante clause and starts with the expression, ‘not withstanding anything to the contrary contained in this Act……….’ implying that section 128A shall have an overriding effect on all other provisions of the CGST law.

According to section 128A(1), waiver scheme is applicable to notices issued under section 73(1 or 3), order u/s 73(9), order u/s 107(11) or section 108(1) of the CGST Act, 2017. Accordingly, following situations are covered i.e., where any amount of tax is payable by a person chargeable with tax in accordance with:

1. a notice issued under section 73(1) or a statement issued under section 73(3), and where no order under section 73(9) has been issued; or
2. an order passed under section 73(9), and where no order under section 107(11) or section 108(1) has been passed; or
3. an order passed under section 107(11) or under section 108(1), and where no order under section 113(1) has been passed.

The other conditions are-

1. Demand should pertain to the period from 1^st July, 2017 to 31^st March, 2020 or part thereof.
2. Taxpayer pays the full amount of tax payable as per the notice or statement or order, on or before due date notified (31.03.2025)
3. Where notice had been issued u/s 74(1) but an order is passed or required to be passed as per section 75(2), such notice or order shall be considered as eligible u/s 128A (1) (a or b)
4. In cases where an application is filed under section 107(3) or under section 112(3) or an appeal is filed by an officer of central tax under section 117(1) or under section 118(1) or where any proceedings are initiated under section 108(1), 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.
5. Section 128A(1) shall not be applicable in respect of any amount payable by the person on account of erroneous refund.
6. Section 128A(1) shall also not be applicable in respect of cases where an appeal or writ petition filed by the said person is pending before Appellate Authority or Appellate Tribunal or a court, as the case may be, and has not been withdrawn by the said person on or before the date notified, (i.e. 31.03.2025).
7. Where tax has been paid and proceedings are deemed to be concluded, no appeal shall lie u/s 107 or 112 of the Act.
8. The benefit of section 128A shall be available only when tax demand as per notice/order is paid in full. The partial payment cases would not be eligible.
1. In case of multiple SCN’s for multiple periods, taxpayer can opt for one or more SCN’s /Orders for the benefit u/s 128A. The scheme is qua notice / order and not qua- assessee.
10. Refund of interest or penalty already deposited during proceedings can not be claimed [3^rd proviso to section 128A(1)]
11. Where the notice is only for penalty and interest and tax stands fully paid, benefit of section 128A could be availed.
50. The benefit of waiver of interest and penalty u/s 128A can be availed for IGST as well as compensation cess also, besides CGST and SGST.
1000. The proper officer for processing the application filed in Form GST SPL-01 would be the proper officer to issue order under Section 73 and Form GST SPL-02 would be the proper officer for recovery under Section 79.

The benefit accruing under section 128A would include, inter alia,

1. No interest u/s 50 shall be payable
2. No penalty under any provision of Act shall be payable.
3. All the proceedings in respect of subject notice /statement /order shall be deemed to be concluded.

Benefit u/s 128A

Inclusions	Exclusions
Section 73 notice Section 73 order Appeals against order u/s 73 Waiver of interest Waiver of penalty Orders of Revisional Authority Re-adjudication order u/s 75(2) / 73	Section 74 notice Section 73 order Waiver of Tax demand Erroneous refunds

(To be continued….)