Top Stories Top 17 GST Amnesty 2024 Scheme Questions Answered Can You Apply for a Waiver Under Section 128A if the Notice Under Section 73 Involves Erroneous Refund Demand? Find Out Here! By Navasree A.M – On November 26, 2024 2:45 pm – 7 mins read The Government has introduced the Goods and Services Tax ( GST ) Amnesty Scheme 2024, following the recommendations of the 53rd GST Council Meeting. As part of this initiative, Section 128A has been incorporated into the Central Goods and Services Tax Act, 2017, effective from November 1, 2024. This provision allows for the waiver of interest, penalty, or both related to demands under Section 73 of the CGST Act for the financial years 2017-18, 2018-19, and 2019-20, subject to specific conditions. Subsequent to the 54th GST Council meeting recommendations, Rule 164 has also been added to the CGST Act prescribing the procedure and conditions for concluding proceedings under Section 128A of the CGST Act.

Here’s the 17 key questions you need clarification. Does Section 128A Apply to Taxpayers Who Paid Tax in Full Before its Effect? Any amount paid towards the demand under Section 128A(1), whether before or after the enactment of Section 128A, and regardless of whether it was paid prior to or after the issuance of the demand notice or order, shall be treated as payment towards the amount specified in Section 128A(1). This applies as long as the payment was made on or before the date notified under Section 128A(1) and was intended to settle the specified demand. Can tax recovered by officers on behalf of a taxpayer count as tax paid under Section 128A? Yes, the amount recovered by tax officers as tax due from another person on behalf of the taxpayer, in relation to a demand, will be considered as tax paid towards that demand under Section 128A, provided the recovery was made on or before the date notified under Section 128A(1). Is it possible to adjust interest or penalty recovered by officers against tax payable under Section 73 for FY 2017-20? No, as per the third proviso to Section 128A(1), no refund is available for any amount paid or recovered as interest or penalty.

Therefore, any such amount paid by the taxpayer or recovered by tax officers cannot be adjusted against the tax payable. Does Section 128A apply when tax is already paid, but notice under Section 73 pertains only to interest/penalty? If the tax dues have already been paid, and the notice or demand orders under Section 73 pertain solely to interest and/or penalty, these cases are eligible for availing the benefit under Section 128A. However, the waiver of interest and penalty does not apply to instances where interest is demanded due to delayed filing of returns or delayed reporting of supplies in returns. Such interest relates to self-assessed liabilities and does not pertain to tax dues. It is directly recoverable under Section 75(12) of the CGST Act. Is the benefit under Section 128A available if a taxpayer opts for partial waiver of interest or penalty or both, on certain issues, by making part payment of the amount demanded in the notice/ statement/ order, as the case may be, and opts to litigate for the remaining issues? No, the Section 128A (1) clearly provides that the waiver of interest or penalty or both is only applicable when the full amount of tax demanded in the notice/ statement/ order is paid.

Can the benefit of Section 128A be applied to periods covered under the waiver, if a notice/order involves multiple periods, If so, then what tax amount is payable? Taxpayers are eligible to apply for a waiver of interest or penalty, or both, under Section 128A in cases where the demand notice/order covers tax periods both within and outside the scope of Section 128A. However, as per Rule 164(4), the taxpayer must pay the full amount of tax demanded in the notice/statement/order to avail of the waiver benefits under Section 128A. The waiver of interest or penalty applies only to the tax periods specified under Section 128A and not to periods outside its scope. While taxpayers are required to pay the entire tax demand as per the notice/statement/order, the proper officer will assess eligibility for the waiver. If eligible, the officer will issue an order in FORM GST SPL-05, reducing the liability for interest or penalty applicable to periods covered under Section 128A. The remaining interest or penalty liability for periods outside Section 128A will still be payable by the taxpayer.

The taxpayer must pay the remaining liability within three months from the issuance of the order in FORM GST SPL-05 or FORM GST SPL-06, as applicable. Failure to make the payment within the specified time will render the waiver of interest or penalty void, as per Rule 164(17). Can a waiver under Section 128A be applied if a notice under Section 73 involves erroneous refund demand?”, if so, what is the tax amount payable for claiming waiver under Section 128A? Yes, taxpayers can avail the benefit of waiver of interest or penalty under Section 128A. However, as per Rule 164(3), they are required to pay the full amount of tax demanded in the notice, statement, or order, including any demand arising from erroneous refunds, to qualify for the waiver. In such cases, the waiver of interest or penalty under Section 128A will only apply to tax demands other than those related to erroneous refunds. Upon payment of the full amount demanded in the notice, statement, or order, the proper officer will evaluate the applicant’s eligibility for the waiver concerning tax demands other than those related to erroneous refunds. If eligible, the officer will reduce the liability accordingly in the order issued in FORM GST SPL-05. However, the liability for interest or penalties corresponding to erroneous refunds will remain payable by the applicant. The remaining liability must be paid within three months from the issuance date of the order in FORM GST SPL-05 or FORM GST SPL-06, as applicable. Failure to pay the amount within the stipulated period will render the waiver granted under Section 128A void, as per Rule 164(17).

In cases where department has filed an appeal against the order mentioned in section 128A(1)(b) or (c)  and the Appellate Authority or the 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 conditional upon the taxpayer paying any additional tax liability determined by the Appellate Authority, Appellate Tribunal, court, or Revisional Authority within three months from the date of the respective order. Even if an order in FORM GST SPL-05 or FORM GST SPL-06 has been issued, the closure of proceedings remains subject to the condition that the taxpayer pays the additional tax liability as determined by the appellate or judicial body in response to the department’s appeal. This payment must be made within three months from the date of the order enhancing the tax liability.

Failure to pay the additional tax amount within this timeframe will render the waiver of interest or penalty granted under Section 128A void, as per Rule 164(16). How can a taxpayer avail waiver of interest/penalty if SLP is pending in the Supreme Court under Section 128A? Yes, in such cases, the applicant must withdraw the special leave petition (SLP) and submit an application in FORM GST SPL-01 or FORM GST SPL-02, as applicable. The application should include proof of SLP withdrawal, a copy of the withdrawal application, or any other relevant document, if the withdrawal order has not been issued at the time of filing the application. The procedure outlined in para 3.1.6 should be followed in such scenarios. Whether the benefit provided under Section 128A will be available for matters involving IGST and Compensation Cess? Yes. A joint reading of Section 20 of the Integrated Goods and Services Tax Act, 2017, Section 11 of the GST (Compensation to States) Act, 2017, and Section 128A of the CGST Act confirms that the benefits under Section 128A of the CGST Act also extend to matters involving IGST and compensation cess. In such cases, full payment of tax refers to the total payment of CGST, SGST, IGST, and compensation cess as demanded in the notice, statement, or order, as applicable. Whether Section 128A covers cases involving demand of irregularly availed transition credit? The transitional credit is considered to be availed on the date it is credited to the Electronic Credit Ledger. Upon reading Rule 121 in conjunction with sub-rule (3) of Rule 117, it is clear that any demand regarding transitional credit wrongly availed, either fully or partially, can be raised under Section 73 or, as the case may be, Section 74. Therefore, if the transitional credit has been availed during the period covered under Section 128A and a notice for demand of wrongly availed credit is issued under Section 73, such demand would fall under the scope of Section 128A. Whether Section 128A will cover waiver of penalties under other provisions, late fee, redemption fine etc? Any penalty, including those under Section 73, Section 122, Section 125, etc., demanded through the demand notice/statement/order issued under Section 73, is eligible for the waiver provided under Section 128A.

However, late fees, redemption fines, and similar charges are not covered by the waiver under Section 128A. Whether payment to avail waiver under Section 128A can be made by utilizing ITC? Yes, to be eligible for the waiver under Section 128A, the tax payment required is the amount demanded in the notice/statement/order. This can be paid either by debiting the electronic cash ledger or by utilizing ITC from the electronic credit ledger, or a combination of both. However, if the demand pertains to tax payable under the Reverse Charge Mechanism or by the Electronic Commerce Operator under Section 9(5), the amount must be paid by debiting the electronic cash ledger only, and not through the electronic credit ledger. Additionally, for demands related to erroneous refunds, the payment must be made in cash by debiting the electronic cash ledger, and cannot be settled through the electronic credit ledger. Whether the benefit of waiver under Section 128A be availed qua import IGST payable under the Customs Act, 1962? No, in such cases, the demand is issued under the provisions of the Customs Act, 1962, not under Section 73 of the CGST Act. Therefore, these cases are not eligible for the waiver of interest or penalty under Section 128A. With retrospective insertion of sub-sections (5) and (6) to Section 16 of the CGST Act, the tax demanded in notice/ statement/ order reduces. Whether the entire tax amount demanded in the notice/ statement/ order has to be paid in such cases, to avail the benefit under section 128A? Sub-rule (5) of Rule 164 specifies that the amount payable to avail the benefit under Section 128A should be calculated by deducting any amount not payable under Section 16(5) or Section 16(6) from the total amount payable as per the notice, statement, or order under Section 73. Therefore, the applicant is required to pay only the amount that remains after such deductions before submitting the application. When calculating the deductible amount, taxpayers should ensure it is based solely on ITC denied due to a contravention of Section 16(4) of the CGST Act, and not on any other grounds.

Taxpayers must also provide a detailed breakdown of the amount not payable under Section 16(5) or Section 16(6) in FORM GST SPL-01 or FORM GST SPL-02, to assist officers in verifying the payment. It is important to note that if the taxpayer is now eligible to claim ITC previously denied due to Section 16(4), based on the retrospectively inserted provisions of Sections 16(5) or 16(6), no application for rectification under the special procedure notified in Section 148 (Notification No. 22/2024-Central Tax, dated 8th October 2024) is required. 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-07/ FORM GST DRC08/ FORM GST APL-04? Yes, in cases where an order has been issued in FORM GST DRC-07, FORM GST DRC-08, or FORM GST APL-04, and the taxpayer has made the required payment through FORM GST DRC-03, the applicant must adjust the payment towards the demand recorded in the Electronic Liability Register. This adjustment must be made in accordance with the second proviso to sub-rule (2) of Rule 164, prior to submitting the application in FORM GST SPL-02.