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TMI BlogClarification of various doubts related to Section 128A of the CGST Act, 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods and Services Tax Rules, 2017 (hereinafter referred to as the CGST Rules ) 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. 1.3 Further, vide notification No. 21/2024-Central tax dated 8th October 2024 , 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 under the said section. Also, for cases where the application is made as per the first proviso to the sub-section (1) of the section 128A of CGST Act , the date on or before which the full payment of tax demanded in the order issued by the proper officer redetermining 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 . 2.1 Various doubts have been raised by the trade and the field formations in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of sub-section (2) of section 75 ), those cases are also covered under Section 128A for the purpose of waiver of interest or penalty or both. 3.1.3 In cases referred to in clause (a) of sub-section (1) of Section 128A where a notice/ statement under Section 73 has been issued demanding tax interalia pertaining to the period from July 2017 to March 2020, for which no order has been issued under section 73 , an application in FORM GST SPL-01 , may be filed electronically on the common portal, by the taxpayer. 3.1.4 In cases referred to in clause (b) of sub-section (1) of Section 128A , where an order has been issued under Section 73 demanding tax inter alia pertaining to the period from July 2017 to March 2020, for which no order has been issued under section 107 or section 108 , an application in FORM GST SPL-02 , may be filed electronically on the common portal, by the taxpayer. Similarly, in cases referred to in clause (c) of sub-section (1) of Section 128A , where an order has been issued under Section 107 or Section 108 , but no order has been issued under section 113 , an application in FORM GST SPL-02 , may be filed electronically on the common portal, by the taxpayer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices/ statements/ orders pertaining to demands under section 73 , for period from July 2017 to March 2020, he is required to file a separate application in FORM GST SPL-01 or FORM GST SPL-02 , as the case may be, in respect of each of the concerned notice/ statement/ order. 3.2 Payment of tax: 3.2.1 With respect to a notice or statement referred to in clause (a) of sub-section (1) of Section 128A , i.e., a notice or statement that is yet to be adjudicated, the payment towards the tax demanded in the said notice shall be made by the taxpayer through FORM GST DRC-03 . 3.2.2 With respect to an order referred to in clause (b) and clause (c) of sub-section (1) of Section 128A , the payment towards such tax demanded shall be made by the taxpayer, only by the making the payment against the debit entry created in the Part II of the Electronic Liability Register (ELR) by the demand order. In this regard, the procedure mentioned in para 4 of Circular No. 224/18/2024 -GST dated 11th July 2024 may be referred to. However, in cases where the payment towards tax demanded in the demand order has already been made through FORM GST DRC-03 , the procedure prescribed in rule 142(2B) may be follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th sub-section (5) or sub-section (6) of Section 16 , from the amount payable in terms of the notice or statement or order under section 73, as the case may be, taxpayer is required to ensure that such amount is deducted only where ITC has been denied solely on account of contravention of Section 16(4) of the CGST Act and not on any other grounds. The tax officer scrutinising such applications is also required to verify that the said amount that has been deducted by the taxpayer as not payable anymore on account of retrospective insertion of sub-section (5) and sub-section (6) to section 16 , was initially denied solely deducted on the basis of contravention of sub-section (4) of section 16 , and not on any other grounds. 3.2.6 It is further mentioned that, in cases referred to in sub-rule (3) and sub-rule (4) of rule 164 , the applicant can file the application for waiver of interest or penalty or both under section 128A , in respect of a notice/ statement/ order mentioned in sub-section (1) of section 128A , only after payment of full amount of tax demanded in the said notice/ statement/ order, including on account of demand pertaining to erroneous refund, if any, and also on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication is issued by the proper officer in FORM GST SPL-05 , then a summary of order in FORM GST DRC-07 need not be issued on the common portal. However, in cases where an order in FORM GST SPL-05 or in FORM GST SPL-06 , as the case may be, has been issued approving an application filed in FORM GST SPL-02 , the liability earlier created in the ELR Part II by the demand order or the appellate order, as the case may be, shall stand modified accordingly. 3.3.7 It is also to be mentioned that as per the second proviso to sub-section (1) of Section 128A , the conclusion of proceedings against a demand notice/ statement/ order under this section and further issuance of such conclusion order in FORM GST SPL-05 or in FORM GST SPL-06 , as the case may be, in cases where the department had filed an application/ initiated revisional proceedings against the said demand notice/ statement/ order, is conditional upon the payment of additional tax payable, if any, as determined by the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority, as the case may be, within three months of issuance of such order. In case, such additional tax is not paid within the specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the orders issued under Rule 164 : 3.4.1 No appeal shall lie under section 107 , against an order issued in FORM GST SPL-05 concluding the proceedings under section 128A. The order issued in FORM GST SPL-07, rejecting the application for waiver, shall be, however, appealable in accordance with sub-section (1) of section 107 within the time limit specified therein, by filing an application in FORM GST APL-01 . In such cases, normally, no pre-deposit may be required to be paid by the taxpayer for filing the said appeal, as the said amount may already have been paid as a part of payment of tax dues involved in the demand notice/ statement / order before filing an application in FORM GST SPL-01 or FORM GST SPL-02 . However, in cases where no amount of tax dues has been paid or amount of tax dues paid is less than the requisite amount for pre-deposit for filing appeal as per sub-section (6) of section 107 , the remaining amount of pre-deposit will be required to be paid for filing the said appeal. 3.4.2 It is also important to note that the subject matter of the appeal will only be regarding the applicability of waiver of interest or penalty or both under Section 128A and not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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. 2 Whether amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer, against a particular demand can be considered as tax paid towards the same for the purpose of Section 128A ? Yes. The said amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer against a demand, shall also be considered as the tax paid towards the said demand, for the purpose of section 128A provided the same has been recovered on or before the date notified under sub-section (1) of section 128A . 3 Whether the amount recovered by the tax officers as interest or pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the demand notice/ order spans tax periods covered under Section 128A and those not covered under the said section. However, as per sub-rule (4) of Rule 164 , the taxpayer shall be required to pay the full amount of tax demanded in the notice/ statement / order, as the case may be, to avail the benefit of waiver of interest or penalty or both under Section 128A . Further, though the amount of tax demanded shall be required to be paid as per the notice/ statement / order, as the case may be, for whole of the period covered under the said notice/ statement / order, but the waiver of interest or penalty or both under section 128A shall only be applicable for the period specified in section 128A , and not for the period not covered under the said section. On payment of the full amount demanded in the notice/ statement/ order, if the proper officer finds that the applicant is eligible for waiver of interest or penalty or both for tax periods covered under Section 128A , he will reduce the liability to that extent in his order in FORM GST SPL-05, and the remaining liability of interest or penalty or both for tax periods not covered under Section 128A , remains payable by the taxpayer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r mentioned in clause (b) or clause (c) of sub-section (1) of section 128A and the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority, has issued an order enhancing the tax liability, and in the meanwhile the proper officer has issued an order in FORM GST SPL-05 under section 128A , and the taxpayer has not paid the said additional amount of tax liability within the specified time limit, what will be the status of the conclusion of proceedings under Section 128A ? Yes, as per the second proviso to section 128A , the conclusion of proceedings in such cases is 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. Accordingly, it becomes clear that even in cases where an order in FORM GST SPL-05 or in FORM GST SPL-06 has been issued the conclusion of the said proceedings will be subject to the condition that the taxpayer pays the additional tax amount as determined by the Appellate Authority or the Appellate Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the amount of transitional credit has been availed in the period covered under Section 128A and notice for demand of wrongly availed credit is issued under section 73 , the same is covered under Section 128A . 12 Whether Section 128A will cover waiver of penalties under other provisions, late fee, redemption fine etc? It is clarified that any penalty, including penalties under section 73 , section 122 , section 125 etc, demanded under the demand notice/ statement/ order issued under section 73 , is covered under the waiver provided under Section 128A . However, late fee, redemption fine etc are not covered under the waiver provided under Section 128A . 13 Whether payment to avail waiver under Section 128A can be made by utilizing ITC? Yes. The payment of tax required to be made for eligibility for waiver under section 128A is the amount of tax demanded in the notice/ statement/ order. Therefore, it can be paid either by debiting from electronic cash ledger or by utilising the Input Tax Credit (ITC), by debiting the electronic credit ledger, or partly from both. However, where the demand is in respect of any amount of tax to be paid by the recipient under Reverse Charge Mechanis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, to enable the officer to verify the payment easily. It is also re-iterated that where the taxpayer is deducting the amount of ITC which was denied on account of contravention of sub-section (4) of section 16 of the CGST Act, but which is now available, as per retrospectively inserted provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, he is not required to file application for rectification in respect of the same as per special procedure notified under Section 148 vide notification No. 22/2024-Central tax dated 8th October 2024. 16 In case of application in FORM GST SPL-02, where the applicant has paid full or partial amount of tax through FORM GST DRC-03 , whether the said applicant is mandatorily required to file application in FORM GST DRC-03A for such tax amount which he desires to get adjusted against tax demand as per FORM GST DRC-0 7/ FORM GST DRC-08 / FORM GST APL-04 ? Yes. In cases where order in FORM GST DRC-07 , FORM GST DRC-08 or FORM GST APL-04 , as the case may be, has been issued and such taxpayer has paid required amount through FORM GST DRC-03 , such applicant is required to adjust the said amount towards the demand created in the E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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