Amnesty for small vendors may be considered by the GST Council, says Central Tax Commissioner

Illustration of a concerned vendor standing next to a fruit stall, pondering an announcement regarding potential amnesty for small vendors from the GST Council.

Issue:Can the GST Council recommend amnesty from interest and penalties for small vendors who have received GST notices triggered by UPI transaction data, particularly in cases of non-registration or non-compliance due to limited awareness or digital literacy?

Rule (Legal Framework):

  1. Section 11(1) of the CGST Act, 2017 – Empowers the Government to exempt goods/services either absolutely or conditionally from the whole or any part of the tax on recommendations of the GST Council.
  2. Section 128 of the CGST Act, 2017 – Provides for waiver of penalty or late fee by the Government on recommendation of the Council.
  3. Section 50 of the CGST Act, 2017 – Provides for levy of interest on delayed payment of tax. However, amnesty or waiver can be notified under public interest, again on recommendation of the Council.

Application (Analysis):

  • Based on the statements made by Kotraswamy M., Commissioner of Central Taxes, it appears that many small vendors were unaware of the requirement to register under GST based on their UPI transaction volumes.
  • Where vendors exceed the threshold limit for registration – ₹20 lakhs for services and ₹40 lakhs for goods (as per Section 22 of the CGST Act) – they are liable to register and pay tax.
  • If they have failed to do so, and notices have been issued, the applicable interest (u/s 50) and penalties (u/s 122, 125) may arise.
  • However, Section 128 read with Section 11(1) empowers the Government, upon recommendation of the GST Council, to grant amnesty by waiving interest and penalty, especially considering public interest or administrative convenience.
  • The Commissioner’s suggestion aligns with this legal mechanism – if the GST Council finds it appropriate, it may recommend an amnesty scheme for small vendors based on UPI data discrepancies, especially for past periods and first-time defaulters.

Conclusion:
Yes, the GST Council has the power to recommend amnesty from interest and penalties under Section 11(1) and Section 128 of the CGST Act, 2017, especially for small vendors who have defaulted due to lack of awareness or digital illiteracy. The Government may issue a notification based on such recommendation to operationalize this relief.