GST Circular dated 15.10.2024 clarifies doubts related to Section 128A

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 GST Act. This section covers waiver of interest or penalty or both relating to demands raised under section 73, for certain tax periods. The new circular addresses key doubts surrounding its interpretation and application, offering clearer guidance to ensure smoother compliance. 

Let’s understand the changes.

Key Highlight Notification No. 238/32/2024-GST 15th October, 2024

• Based on the recommendations of the GST Council made in its 53rd meeting, Section 128A has been inserted in the CGST Act, 2017 with effect from 01.11.2024 to provide for waiver of interest or penalty or both, relating to demands under section 73 of the CGST Act about Financial Years 2017- 18, 2018-19 and 2019-20, subject to certain conditions.
• Subsequently, based on the recommendations of the GST Council made in its 54th meeting, Rule 164 has been inserted in 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.
• 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 to avail the benefit of waiver of interest or penalty or both under the said section.
• This circular covers the procedure to be followed by the taxpayers and the tax officers to avail and implement the benefit provided under Section 128A, which is as follows:

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• The proper officer on receipt of the application in FORM GST SPL-01 or FORM GST SPL-02, shall examine the said application. If, on examination, he finds that the said application is liable to be rejected, he shall issue a notice to the applicant, within three months from the date of receipt of the said application, in FORM GST SPL-03 on the common portal. The proper officer shall also give the applicant an opportunity of a personal hearing
• On receipt of the notice in FORM GST SPL-03, the applicant may file his reply in FORM GST SPL-04, electronically on the common portal, within a period of one month from the date of receipt of the notice.
• 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.
• 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.
• Many other issues are clarified in this circular.

To read the full circular, click here.

‍Conclusion

‍The GST Circular dated 15th October 2024 provides essential clarifications that streamline the process of availing the benefits under Section 128A, particularly for taxpayers dealing with issues such as interest and penalty waivers, erroneous refunds, and transitional credit. By addressing various scenarios, the circular offers clear guidelines on eligibility, payment methods, and the necessary procedures for businesses to follow. Taxpayers can now better understand how to navigate the complexities of Section 128A, ensuring compliance while making the most of the relief options available. However, it remains crucial for businesses to ensure timely and accurate payments, as failure to meet deadlines may result in the waiver benefits becoming void. This circular plays a pivotal role in simplifying GST compliance, fostering greater clarity and ease for taxpayers across multiple scenarios.