Conditional Waiver of Penalty and Interest u/s 128A of GST Act: All You Need To Know
Section 128A has been introduced into the CGST by means of the Finance Act (No.2) of 2024 dated 16 August 2024. Read on to know all about the latest addendum in the GST Act
India’s Tax Regime has been undergoing dynamic changes since the introduction of the Goods and Service Tax ( GST ) in 2017 and the statutory provisions under the regime. Section 128A was recently introduced in the Central Goods and Services Tax Act, 2017 (CGST Act) by means of the Finance Act (No.2) of 2024. Section 128A, pertaining to conditional waiver of interest and penalties...
India’s Tax Regime has been undergoing dynamic changes since the introduction of the Goods and Service Tax ( GST ) in 2017 and the statutory provisions under the regime. Section 128A was recently introduced in the Central Goods and Services Tax Act, 2017 (CGST Act) by means of the Finance Act (No.2) of 2024.
Section 128A, pertaining to conditional waiver of interest and penalties issued under the Act has been introduced into the CGST Act, 2017 in consideration of numerous difficulties faced by taxpayers due to the levy of interests and penalties on non-payment or short payment of tax during the initial years of GST.
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A recent development regarding Section 128A, is the publication of Notification No.21/2024 - Central Tax dated 08.10.2024, providing the date up to which waiver of interest or penalty on the tax payable as per demand notice or order referred to in Section 128A is permitted.
Reason for introduction of 128A
Section 128A of the CGST Act, 2017 aims to decrease the overall tax burden on taxpayers and provides Assessees relief towards their tax obligations and allied penal liabilities relating to Financial Years (F.Y.) between 2017 and 2020.
While Sec.128A waives the interests and penalty amounts issued against non-fraudulent taxpayers, it does not waive off the principal tax demand raised against the Assessees.
Scope and extent of Sec.128A
The provisions of Sec.128A shall only extend to penal amounts arising from the issuance of Notices or Orders under the following provisions. It shall include:
Notices furnished to Assessees under Section 73 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful- misstatement or suppression of facts) of the CGST Act, 2017.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
Any Orders passed under Section 107 (Appeals to Appellate Authority) of the CGST Act, 2017 against any disputed tax assessments of the Assessee
Any Orders passed under Section 108 (Powers of Revisional Authority) of the CGST Act, 2017 against any disputed tax assessments of the Assessee
Who is eligible to avail waiver?
The Amnesty Scheme under Sec.128A of the CGST Act, 2017 as recommended by the 53rd GST Council Meeting may be granted to taxpayers who have outstanding tax dues for the Financial Years 2017-18, 2018-19 and 2019-20.
Taxpayers should disburse all their demanded tax amounts within the specified period in order to avail the waiver of penalties and interests.
Period of taxability available for waiver
Taxpayers have the liberty to make payments on the demanded tax amounts without the levy of interest or penalties subject to other provisions of Sec.128A until 31 March, 2025.
Process and Forms for availing Waiver
Taxpayers, eligible to avail the facilities of Sec.128A may file an electronic application through FORM GST SPL-01 on the GST Portal, including all requisite details regarding the demand notice or statement issued to the Assessee priorly.
If an Applicant seeks to avail waiver in respect of a notice or statement under Sec.128A(1)(a) of the Act, they shall file an Application under FORM GST SPL-01;
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
Similarly, if the waiver is in respect of an order under Sec.128A(1)(b) or Sec.128A(1)(c) of the Act, they shall file an Application in FORM GST SPL-02;
Payments are to be made through the Electronic Liability Register. If the payments are made through FORM GST DRC-03 against the demands under Sec.73 of the CGST Act, 2017, a separate application through FORM GST DRC-03A has to be filed in order to transfer the amount to the Electronic Liability Register.
The Applicant shall also duly file details of the withdrawal of any pending litigation process pertaining to the same period and demanded amounts. In the event that the Applicant has filed for withdrawal of litigation, but has not received a final order on the same, the Application for Withdrawal shall be adduced by the Applicant.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
The Officer in charge of handling the waiver Application filed by the taxpayer shall determine whether the Application pertains to a non fraudulent case under Section 73 or Section 79 pertaining to Recovery of Tax.
Orders shall in normal circumstances, be issued within three months of the Application; the Application is deemed to be allowed if no Order has been passed within three months, or six months if the demand involves Appeals.
Exclusions within Sec.128A
The waivers are not applicable to any tax liabilities that arose from erroneous refunds or litigation pertaining to the amounts sought to be waived off is pending before any adjudicatory body and haven't yet been withdrawn by the Applicant.
If Interest and Penalties on the amount have already been paid by the Applicant, the same shall not be refunded.
Once the requisite tax amount is paid and proceedings have been concluded, the process is deemed to have been completed and no appeals can be made under Section 107 or Section 112 of the Act.
Conclusion
The current provisions have been notified as part of the Amnesty Scheme purported by the Ministry of Finance and aims at reducing tax-related litigation and in the reduction of the overall tax-burden on taxpayers without additional pressure. The introduction of the GST provisions in 2017 brought with it a chaotic tax environment leading to the presence of huge confusion amongst taxpayers and tax-enforcers.
Adapting to the new provisions and the various tenets it encompassess is a continuous process, such schemes introduced by the Government facilitates easier implementation of the GST regime.
To Read the full text of the Order CLICK HERE
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