Unlock Benefits of CGST Interest & Penalty Waiver Today

Unlock Benefits of CGST Interest & Penalty Waiver Today

The Central Board of Indirect Taxes and Customs (CBIC) has issued detailed clarifications on the implementation of Section 128A of the Central Goods and Services Tax (CGST) Act, 2017, which comes into effect from November 1, 2024. This new section offers taxpayers an opportunity to avail a waiver of interest, penalties, or both under Section 73 of the CGST Act, subject to specific conditions. Here, we delve into the key highlights, procedural steps, and critical clarifications to help taxpayers better understand the provision. GST Registration

Key Applicability and Timelines

Section 128A applies to tax demands for the financial years 2017-18, 2018-19, and 2019-20. To avail the waiver, taxpayers must ensure the following:

1. Full Payment of Tax: Tax demands in the notice/statement/order must be fully paid before the deadline of March 31, 2025, as notified under Notification No. 21/2024-Central Tax.
2. Six-Month Timeframe for Reassessed Orders: In cases of reassessment under Section 73, taxpayers must pay the full demand within six months of the reassessment order.

Procedural Requirements

CBIC has provided a detailed procedure for availing the waiver in Circular No. 238/32/2024-GST:

1. Application Submission: Taxpayers need to file applications in FORM GST SPL-01 or FORM GST SPL-02, depending on the case.
2. Payment of Tax: Any tax amount due must be cleared in full before filing the application.
3. Verification and Order: Once the application is processed, tax officers will issue an order in FORM GST SPL-05 or FORM GST SPL-06.

Conditions for Availing Waiver

• No Partial Waiver: Section 128A mandates the full payment of tax demands to be eligible for the waiver. Partial payments will not qualify for relief.
• Interest and Penalty Exceptions: Waivers do not apply to:
  • Interest arising from delayed return filing or late reporting of supplies.
  • Late fees or redemption fines. GST Filing

Additional Clarifications

The CBIC has addressed several critical scenarios regarding the waiver:

1. Tax Paid via Recovery: Amounts recovered by tax officers on behalf of the taxpayer are considered as tax paid for waiver purposes.
2. Ineligible Waivers: Cases involving IGST under the Customs Act are not eligible since they fall outside the scope of the CGST Act.
3. Refund Demands: Taxpayers can file waiver applications for demands involving erroneous refunds if the additional tax is paid within the specified timeframe.

Special Cases

• Transitional Credit: If transitional credit availed during 2017-2020 is disputed, the waiver applies if covered under Section 73.
• Pending Legal Cases: Taxpayers must withdraw any Special Leave Petition (SLP) filed in the Supreme Court before applying for the waiver.
• Multiple Period Demands: For notices spanning periods both covered and not covered under Section 128A, taxpayers must pay the full demand to avail the waiver.

What Happens if Deadlines Are Missed?

If a taxpayer fails to pay the required amount within three months from the issuance of an order, the waiver becomes void under Rule 164(17) of the CGST Rules. Similarly, any additional demand arising from appellate or tribunal orders must be paid within three months, failing which the waiver becomes invalid.

Section 128A of the CGST Act provides a significant opportunity for taxpayers to resolve old disputes by offering waivers on interest and penalties. However, it requires careful adherence to the specified timelines and procedures. Taxpayers must act promptly, ensuring compliance to maximize the benefits of this provision.