GST Amnesty Scheme-Section 128A!

The introduction of Section 128A in the CGST Act, 2017 marks a significant step in simplifying tax compliance and resolving long-standing disputes under the Goods and Services Tax (GST) framework. The section offers taxpayers a valuable opportunity to waive interest and penalties on certain tax demands raised for 2017-18, 2018-19, and 2019-20. This waiver scheme is part of the government's ongoing efforts to reduce tax-related disputes and provide relief to taxpayers facing prolonged litigation or payment delays.

Various advisories and circulars are issued on the GST Amnesty Scheme u/s 128A and its implementation. Let us summarise all the information and updates together!

GST Amnesty Scheme u/s Section 128A

In 2024, a significant change was introduced to the Goods and Services Tax (GST) framework with the insertion of Section 128A into the CGST Act, 2017, which provides a relief mechanism for taxpayers by waiving interest and penalties for certain tax demands raised under Section 73. The amendment primarily targets tax demands for the financial years 2017-18, 2018-19, and 2019-20. This section was introduced to ease the burden on taxpayers by offering a waiver if the full tax amount is paid within specific deadlines.

Key Developments:

1. Introduction of Section 128A (CGST Act, 2017):
   • After the budget was declared on 23^rd July 2024, Finance (No. 2) Act, 2024 was published on 16^th August 2024. Along with many other changes, a new section 128A is inserted in the CGST Act, 2017. 
   • Section 128A allows taxpayers to waive interest and penalties on tax demands raised under Section 73 if the full tax is paid by the prescribed deadline.
   • This provision applies to tax periods from 1st July 2017 to 31st March 2020 i.e. FY 2017-18, FY 2018-19, and FY 2019-20. 
   • Taxpayers must ensure that there are no pending appeals or writ petitions and no erroneous refunds to avail of the waiver.
2. Notification No. 21/2024 (October 8, 2024):
   • On October 8, 2024, the Ministry of Finance, Department of Revenue, issued Notification No. 21/2024 - Central Tax under the CGST Act, 2017. This notification outlines the timelines for registered taxpayers to pay their outstanding tax liabilities as per notices, statements, or orders under Section 128A.
   • For registered persons who have received notices, statements, or orders under section 128A(a), (b), or (c), the payment due date is up to March 31, 2025. These clauses refer to the cases where the order is not passed u/s 73(9), 107(11), 108(1), or 113(1).
   • In cases where the order is passed or required to be passed by the proper officer in pursuance of the direction of the Appellate Authority, Appellate Tribunal, or a court, the due date for payment is the Date ending on completion of six months from the date of issuance of the order by the proper officer redetermining tax under section 73 of the said Act.

3. GST Circular No. 238/32/2024 (October 15, 2024):
   • On October 15, 2024, the Goods and Services Tax (GST) authorities issued an important circular that provides much-needed clarification on Section 128A of the CGST Act.
   • This circular provides important clarifications about the implementation of Section 128A, confirming that taxpayers must file applications using FORM GST SPL-01 or FORM GST SPL-02 on the common portal to avail of the waiver.
   • The proper officer shall issue an order in FORM GST SPL-05, accepting the said application, if he is satisfied that the applicant is eligible for a waiver of interest or penalty or both under Section 128A. However, if the proper officer, based on the application and the reply in FORM GST SPL-04 received from the taxpayer, is of the view that the applicant is not eligible for a waiver of interest or penalty or both under Section 128A, he shall issue an order in FORM GST SPL-07, rejecting the said application.
   • If the application is rejected, taxpayers may appeal the decision.
4. GST Advisory (November 8, 2024:
   • The advisory from GSTN elaborates on the procedural aspects of the waiver scheme under Section 128A.
   • As per the waiver scheme, if a notice or order is issued under Section 73 for the financial years 2017-18, 2018-19, and 2019-20, the taxpayers are required to apply FORM GST SPL-01 or FORM GST SPL-02, respectively on the common portal within three months from notified date, which is 31.03.2025.
   • These forms will be available on the common portal tentatively from the first week of January 2025.
   • In the meantime, taxpayers can pay the demanded tax amount through the “payment towards demand” facility in case of demand orders and through Form GST DRC-03 in case of notices. However, if payment has already been done through Form GST DRC-03 for any demand order then the taxpayer needs to link the said Form GST DRC 03 with such demand order through Form GST DRC-03A, which is now available on the common portal.

Conclusion

The introduction of Section 128A and related notifications, circulars, and advisories provides much-needed relief to taxpayers by offering a waiver of interest and penalties for tax demands from 2017-2020, provided full payment is made by March 31, 2025. The waiver is available to taxpayers who have received demands under Section 73 and meet the specific eligibility criteria. Taxpayers are required to follow the procedural guidelines, including filing the necessary forms and making payments within the prescribed deadlines, to benefit from the relief.

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