CBIC releases FAQ and clarifications about the new GST amnesty scheme for waiver of interest and penalty

Circular No. 238/32/2024-GST issued by the CBIC on 15th October 2024 clarifies various aspects related to Section 128A of the CGST Act, 2017, which provides relief to GST-registered taxpayers with pending tax notices under Section 73 of the CGST Act, 2017. The scheme waives all outstanding interest and penalties for specific financial years if the taxpayer settles their GST liability. Key aspects include:

  1. Eligibility: Taxpayers must settle their outstanding liabilities for non-fraud cases related to fiscal years 2017-18, 2018-19, and 2019-20 to benefit from the waiver.
  2. Payment of tax: The demanded tax in the notice can be paid using either the electronic cash ledger or Input Tax Credit (ITC) from the electronic credit ledger or a combination of both.
  3. Deadline: Payments must be made by March 31, 2025.
  4. Clarifications: The Ministry of Finance issued clarifications via the CBIC on October 15, 2024, ensuring uniform implementation under Section 168(1) of the CGST Act.

Key Provisions:

  1. Waiver of Interest and Penalties: Section 128A allows for a waiver of interest, penalties, or both, for tax demands under Section 73, subject to the taxpayer fulfilling conditions like paying the full tax amount demanded.
  2. Procedure for Application:
    • Taxpayers must apply electronically using FORM GST SPL-01 or GST SPL-02.
    • Applications must be filed within three months from 31st March 2025 or six months from the redetermined tax order (where applicable).
  3. Eligibility:
    • Section 128A applies to taxpayers with pending notices or orders under Section 73 (i.e., non-fraudulent tax demands).
    • It also covers cases where notices were initially issued under Section 74 but later required to be processed under Section 73.
  4. Payment of Tax:
    • Tax payment can be made either through the electronic cash ledger or by using Input Tax Credit (ITC). However, if the demand is related to reverse charge or erroneous refunds, it must be paid using the cash ledger.
  5. Multiple Notices: Separate applications must be filed for each notice or order issued under Section 73 for the periods covered (July 2017 to March 2020).
  6. Withdrawal of Appeals: Taxpayers with appeals pending before appellate authorities must withdraw them to avail of the waiver.
  7. Processing and Rejection: The proper officer will process the application and issue an approval order (FORM GST SPL-05) or rejection order (FORM GST SPL-07), with an option for the taxpayer to file an appeal against rejection.
  8. Applicability to IGST & Compensation Cess: The waiver is also available for IGST and Compensation Cess demands.

Clarifications:

  • Tax paid before Section 128A came into effect is considered valid.
  • Penalties and interest paid earlier cannot be refunded but may be waived for future amounts.
  • The waiver does not apply to demands related to import IGST under the Customs Act.
  • Full tax payment is mandatory for the waiver; partial payments or selective litigation are not allowed.

Here are some of the FAQ s from the Circular dated 15th October 2024

1.Whether the benefit provided under Section 128A will be applicable to taxpayers who have paid the tax component in full before the date on which the said section has come into effect?

Ans: In this regard, it is to be mentioned that all such amount paid towards the said demand up to the date notified under sub-section (1) of section 128A, irrespective of whether the said payment has been done before Section 128A comes into effect, or after that, and irrespective of whether such payment was made before the issuance of the demand notice or demand order, or after that, shall be considered as paid towards the amount payable in sub-section (1) of Section 128A, , as long as the said amount has been paid upto the date notified under sub-section (1) of section 128A and was intended to be paid towards the said demand.

2.Whether amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer, against a particular demand can be considered as tax paid towards the same for the purpose of Section 128A?

Ans: Yes.
The said amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer against a demand, shall also be considered as the tax paid towards the said demand, for the purpose of section 128A provided the same has been recovered on or before the date notified under sub-section (1) of section 128A.