Section 128A of CGST Act: A Detailed Overview

Mar 266 min read

The CGST Act 2017's introduction of Section 128A marked a significant step toward simplifying tax compliance and resolving long-standing disputes under the Goods and Services Tax (GST) framework. The section offers a substantial opportunity for taxpayers to avoid interest and penalties on tax demands raised for 2017–18, 2018–19, and 2019–20. This waiver program is one of the government's ongoing initiatives to reduce tax-related disputes and assist taxpayers facing lengthy legal proceedings or payment delays. Numerous advisories and circulars address the GST Amnesty Scheme under Section 128A. In this article, we will give a summary of all the information and advancements.

What is the GST Amnesty Scheme u/s Section 128A?

The CGST Act 2017, amended in 2024, includes Section 128A, which offers a relief mechanism for taxpayers by waiving interest and penalties for specific tax demands made under Section 73. It was a significant change to the Goods and Services Tax (GST) framework. The amendment targets tax demands for the 2017–18, 2018–19, and 2019–20 fiscal years. This provision offers a waiver if the entire tax amount gets paid by deadlines added to lessen the burden on taxpayers.

Key Provisions Under GST Section 128A

The following are some significant provisions found in GST Section 128A:

Scope of Application

The relief includes the sums resulting from orders issued under sections 107 and 108, which deal with the amendment of tax assessments and pleas, respectively, and notices given under section 73, which is related to non-payment or short tax payment.

Provisions for Relief

To receive the benefit, taxpayers must pay the remaining amount specified in the relevant notice or order. According to the modification, if an appeal regarding the tax amount is pending, the relief will not be applicable until the taxpayer withdraws the plea.

Upcoming Proceedings

All relevant proceedings must be completed under these amended provisions once the amount settles. Taxpayers should know that if this settlement gets finalized, some orders will not be challenged.

Tax Payment Without Penalties

The assessees may pay off their debts as specified in a notice or order issued under specific CGST act subsections without paying interest or penalties. It matters if they finish paying the entire amount by the deadline established by the government recommendations made by the Goods and Services Tax (GST) Council.

Limitations

The issues involving false refunds are exempt from the same clause. Furthermore, taxpayers will not be able to receive a refund for any interest or penalties paid, so they cannot benefit from relief related to past payments.

GST Notices Eligible for the Amnesty Scheme U/S 128A

Demands about routine, non-fraudulent issues, such as clerical errors, late filing returns, short tax payments, and/or excessive tax claims, are eligible for the same exemption. Genuine errors or alternative interpretations of the GST statutory provisions, free from malice, must be the primary reason for these notices. Only GST notices issued between July 1, 2017, and March 31, 2020 (both dates included) are eligible for benefits under Section 128A. The demands made under section 73 that pertain to non-fraudulent cases get addressed by the amnesty plan under section 128A. It includes mistakes in filing returns or reporting transactions, late filing, and legitimate issues with short tax payments or excess GST ITC claims when the problem arises from different interpretations of the changing GST law.

GST Notice Under Section 74 Not Qualifying for the GST Amnesty Scheme

It is vital to recognize that this program does not cover cases of incorrect refunds, in which a taxpayer obtains a refund for which they were not eligible. The scope of this amnesty plan does not include Section 74 cases. Section 74 deals with situations involving willful misrepresentation, fraud, or fact suppression, all considered serious violations.

Deadline for Applying GST Amnesty Scheme U/S 128A

According to the department's circulars, the standard deadline for amnesty is March 31, 2025. It is also the standard deadline for submitting a contested tax payment. The GSTN has announced in the advisory that the two forms previously used to apply for it, GST SPL-01 and SPL-02, are now accessible on the GST portal. To apply for the same scheme, the taxpayer must first withdraw any valid objections, then apply using one of these forms, and finally, on or before March 31, 2025, pay the full GST tax required.

Types of Forms Related to the GST Amnesty Scheme

The following lists the various form types used in the GST Amnesty Scheme as described in Section 128A of the CGST Act:

GST SPL 01: To request a waiver of notices or statements, use the GST SPL 01 form. Make sure to include the documents listed in Table 7.

GST SPL 02: Applies for waivers in cases where an order in appeal or demand order is issued.

GST SPL 03: Used to give the applicant a Show Cause Notice. It includes the date and time of a personal hearing, the reasons for issuing the notice, and any applicable short tax payments.

GST SPL 04: Used to respond to the Notice of Show Cause. Respondents and supporting documentation, such as proof of tax payment, must be submitted within a month.

GST SPL 05: Issued to wrap up proceedings if the application or response is accepted. There are specified dates for when the order is issued depending on whether a response is received.

GST SPL 07: Issued when an application gets denied. It covers things like late or incomplete payments and inaccurate declarations. The order is appealable, and if no new appeal gets filed, any appeals withdrawn for the application get reinstated.

GST SPL 06: When an appellate authority grants an appeal after dismissing the initial application, GST SPL 06 is issued.

GST SPL 08: When an appeal gets denied by an appellate body.

Effect of GST Amnesty Scheme on Taxpayers

During the difficult economic times of the past few years, the same amendment managed to provide relief to businesses and individuals who encountered difficulties in meeting their tax obligations. Settling past-due taxes without incurring penalties encourages compliance with tax duties and alleviates the financial strain on taxpayers. The assessors must examine their tax liabilities for the specific period and use that opportunity to settle any outstanding balances to lessen the financial impact. It is essential to keep up with the government's notifications regarding the payment deadlines to guarantee adherence to the revised provisions.

Conclusion

Taxpayers now have much-needed relief thanks to Section 128A and its accompanying notifications, circulars, and advisories, which waive interest and penalties for tax demands made between 2017 and 2020 if the user pays by March 31, 2025. Taxpayers who meet the specific eligibility requirements and have received demands under Section 73 are eligible for the waiver. To relief, taxpayers must adhere to the procedural rules, which include completing the required paperwork and paying by the deadline.

FAQ

Q1. What is section 128A?

About demands for the fiscal years 2017–18, 2018–19, and 2019–20, this new Section 128A offers a conditional waiver of interest and penalty in situations where demand notices get issued under Section 73 and the taxpayer pays the full amount owed before the notification date.

Q2. How can we take the advantage of Section 128A of the CGST Act?

A taxpayer is still eligible to receive the benefits of Section 128A if they have paid the entire tax amount and only the interest or penalty challenged. A taxpayer should be able to obtain this relief regardless of whether departmental appeals are pending or ongoing.

Q3. Who is eligible for the GST Amnesty Scheme?

If a taxpayer has only received a notice under section 73 and no final order is issued, they must use the GST SPL 01 form to apply for the Amnesty Scheme. When an order gets issued by the first-level tax authorities or the appellate authorities, Form GST SPL 02 is applicable.

Q4. What is the validity period of the amnesty scheme?

The CBIC notification stated that the GST Amnesty Scheme 2025 deadline was March 31, 2025.

Q5. Is it possible to pay GST in instalments?

A taxpayer may submit an application to the Commissioner for payment in instalments if they cannot pay the full GST dues (tax, interest, and penalty) in one go or by the deadline. The payment period may be extended for a maximum of two years, as only 24 instalments are allowed.

Q6. How can I apply for the GST Amnesty Scheme 2025?

You must first register on the official GST portal to apply for the GST Amnesty Scheme 2025. Go to the "Returns" section after logging in, select the relevant return period, and then file the past-due returns. The portal will automatically calculate the lower penalties and interest applied under the plan. To complete the filing procedure, make sure you pay the indicated amount.