The Central Board of Indirect Taxes and Customs (CBIC) has introduced significant amendments to the CGST Act, 2017, with the insertion of Section 128A, effective from November 1, 2024. This provision aims to provide taxpayers with relief by waiving interest, penalties, or both for specific tax demands under Section 73 of the Act for the financial years 2017-18, 2018-19, and 2019-20. The recent notifications and clarifications aim to streamline the implementation of this provision, offering much-needed clarity to taxpayers and tax officers alike.
Key Highlights of Section 128A
- Scope and Applicability:: Section 128A applies to cases where tax demands have been raised under Section 73 of the CGST Act. It covers various scenarios: Notices or statements issued but not adjudicated. Orders issued under Section 73 but not contested under appellate or revisional authority. Cases directed for redetermination by appellate authorities under Section 75(2).
Additionally, cases initially raised under Section 74 but later redetermined under Section 73 also fall under its ambit.
- Waiver Conditions: To avail the benefits under Section 128A, taxpayers must: File applications in specified forms (GST SPL-01 or GST SPL-02). Ensure full payment of the tax demanded by March 31, 2025, or within six months of the redetermination order, as applicable. Withdraw any pending appeals or writ petitions related to the demand.
- Deduction of Non-Payable Amounts: Taxpayers can deduct amounts not payable due to retrospective amendments in Section 16(5) and Section 16(6). This ensures fair calculation of the tax liability while applying for the waiver.
Procedure for Availing Relief
Filing Applications:
Taxpayers must submit electronic applications on the common portal within three months from the notified date or six months for redetermined cases. Each notice or order requires a separate application.
Payment of Tax:
Payments can be made using FORM GST DRC-03 or directly against debit entries in the Electronic Liability Register, as per the demand order.
Processing of Applications:
The designated proper officer will scrutinize the application and issue an order in either FORM GST SPL-05 (acceptance) or FORM GST SPL-07 (rejection). Applications not processed within the stipulated timeframe are deemed approved.
Ensuring Compliance and Avoiding Pitfalls
- Withdrawal of Appeals:Taxpayers must withdraw related appeals or writ petitions and provide proof of withdrawal when filing their application.
- Proper Deductions:Only ITC denied due to contravention of Section 16(4) can be deducted, ensuring compliance with retrospective amendments.
- Timely Payments:Adherence to the payment deadlines is crucial. Failure to comply renders the waiver void, reinstating interest and penalties.
Section 128A of the CGST Act is a progressive step towards resolving legacy disputes and providing relief to taxpayers burdened by past demands. With detailed procedures and clear timelines, the amendments offer a structured approach to closure. Both taxpayers and tax officers must ensure strict compliance to fully realize the benefits of this provision.
