Section 128A provides for waiver of interest and penalty where notice is issued under section 73 of CGST Act and corresponding tax payment is made on or before 31st March 2025. Amnesty under section 128A is available for FY 2017-18, 2018-19 and 2019-20. For waiver, the taxpayer must apply Form GST SLP-01 or GST SLP-02 depending on the order. The GST officials are facing issues where a department appeal is filed against the order issued under section 73 of the GST Act and are in dilemma whether the benefit of Section 128A should be granted in such cases or not.
CBIC has issued the following detailed procedures vide Instruction No. 02/2025 – GST dated 7th Feb 2025 to be followed where department appeal is filed against interest or penalty only and the taxpayer has filed an application for claiming waiver under section 128A of CGST Act.
- Section 128A of the CGST Act provides a waiver of interest or penalty or both where demand is issued under section 73 about Financial Years 2017-18, 2018-19, and 2019-20. Various doubts related to such a section were clarified vide Circular No. 238/32/2024-GST dated 15th October, 2024.
- CBIC received various references from field formations seeking clarification as to whether the benefit of section 128A be extended to taxpayers in cases where the tax amount has been paid but the department has filed an appeal on various grounds such as:
- Wrong arithmetic calculation of interest; or
- Penalty not imposed; or
- Penalty is imposed for less than the prescribed threshold etc.
- In Circular No. 238/32/2024-GST dated 15th October 2024, Point No. 4 of Table 4, CBIC has discussed the cases where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved. CBIC has clarified that such cases shall be considered for availing the benefit of section 128A.
- Therefore, where the taxpayer has paid the full amount of tax and only interest or penalty is in dispute, then the taxpayer is eligible to avail the benefit of Section 128A of the CGST Act.
- Similarly, just because the department has gone in an appeal or is in the process of filing an appeal, a taxpayer who is otherwise eligible for availing the benefit of section 128A, should not be denied the benefits. Further, the said provision intends to reduce litigation and a taxpayer should not be denied the benefit of the provision on mere technicalities.
- Therefore, where the taxpayer has paid the tax amount in full on demands issued under section 73 of the CGST Act and the department is in appeal or under the process of filing an appeal only on account of wrong interest calculation or wrong imposition or non-imposition of a penalty and the taxpayer fulfills other conditions of section 128A than the proper officer may proceed towards withdrawing such appeal filed and in the case where the order under section 73 is under review stage only, accept the same.
Conclusion:
Section 128A intends to provide a one-time waiver to the taxpayer from the interest and penalty subject to payment of tax. This clarification is indeed a relief and is more logical as the amount of interest and penalty is to be waived in pursuance of section 128A. Therefore, filing a department appeal against an amount to be waived is of no use to the department.
