Have a query about the new GST amnesty scheme for waiver of interest and penalty? CBIC releases FAQ and clarifications
The Ministry of Finance has issued additional explanations and answers to common queries (FAQ) regarding the recently implemented section 128A concerning the GST Amnesty Scheme. This provision is designed to waive all outstanding interest and penalties for certain financial years, on the condition that the qualifying taxpayer settles their outstanding GST tax liability.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} “Various doubts have been raised by the trade and the field formations in respect of implementation of provisions of Section 128A of the CGST Act, relating to waiver of interest or penalty or both in respect of demands under section 73 of the CGST Act Pertaining to Financial Years 2017-18, 2018-19 and 2019-20. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168(1) of the CGST Act, hereby issues these clarifications and guidelines,” said the Ministry of Finance via the Central Board of Indirect Taxes and Customs (CBIC) in a circular dated October 15, 2024.
What is Section 128A GST Amnesty scheme?
The Government of India introduced an amnesty scheme in Budget 2024 by amending the CGST Act, 2017. The said benefit is provided to demand arising out of non-fraud cases for the period July 2017 to March 2020.All eligible assessees who wish to apply for this amnesty scheme have to make the payments via Form DRC 03 on or before March 31, 2025 and upload the stipulated forms on or before June 30, 2025.
Important FAQs about GST amnesty scheme waiver of penalty and interest under section 128A
According to the circular dated October 15, 2024, here are the FAQs:
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Q1. 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 up to the date notified under sub-section (1) of section 128A and was intended to be paid towards the said demand.Q2. Whether the benefit provided under Section 128A will be applicable in cases, where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved?
Ans: Where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved, the same shall be considered for availing the benefit of section 128A. However, the benefit of waiver of interest and penalty shall not be applicable in the cases where the interest has been demanded on account of delayed filing of returns, or delayed reporting of any supply in the return, as such interest is related to demand of interest on self-assessed liability and does not pertain to any demand of tax dues and is directly recoverable under sub-section (12) of section 75.Q3. Whether Section 128A will cover waiver of penalties under other provisions, late fee, redemption fine etc?
Ans: It is clarified that any penalty, including penalties under section 73, section 122, section 125 etc, demanded under the demand notice/ statement/ order issued under section 73, is covered under the waiver provided under Section 128A. However, late fee, redemption fine etc are not covered under the waiver provided under Section 128A.Q4. Whether payment to avail waiver under Section 128A can be made by utilising ITC?
Yes. The payment of tax required to be made for eligibility for waiver under section 128A is the amount of tax demanded in thenotice/ statement/ order. Therefore, it can be paid either by debiting from the electronic cash ledger or by utilising the Input Tax Credit (ITC), by debiting the electronic credit ledger, or partly from both. However, where the demand is in respect of any amount of tax to be paid by the recipient under Reverse Charge Mechanism or by the Electronic Commerce Operator under section 9(5), then the said amount shall be required to be paid by debiting the electronic cash ledger only and not through the electronic credit ledger. Further, where the amount has to be paid for the demand of erroneous refund, the demand in respect of erroneous refund paid in cash is required to be paid only by debiting the electronic cash ledger only and not through the electronic credit ledger.There are 16 FAQs, click here to read all about them-https://taxinformation.cbic.gov.in/view-pdf/1003243/ENG/Circulars
Advocate Apoorv Phillips, Senior Associate, Sirmacs Consultancy Services (Law Firm) says that not all tax demands can be paid by utilising ITC. “Not all demands are covered by the same, and there are two exceptions:
1. Reverse Charge Mechanism (RCM): Demand was raised based on the fact, that the recipient of service/goods did not pay the tax on a reverse charge basis.
2. Demand raised on account of an erroneous refund is granted.
In these two circumstances as mentioned above, the party needs to debit it's electronic cash ledger, and cannot utilize the Electronic Credit Ledger.”
Additional clarifications regarding GST Amnesty Scheme under section 128A
In the said circular, the procedure to be followed by the taxpayers and the tax officers to avail and implement the benefit provided under Section 128A, are given as follows:Filing of the GST Amnesty scheme application under section 128A
Section 128A provides for “Waiver of interest or penalty or both relating to demands raised under section 73, for certain tax periods”. Therefore, provisions of Section 128A are applicable in cases where notices/ statements have been issued under Section 73, for the FYs 2017-18, 2018-19 and 2019-20, in the following situations:(a)Where a notice issued under sub-section (1) of section 73or a statement issued under sub-section (3) of section 73,but where no order under sub-section(9) of section 73 has been issued;
(b) Where an order has been issued under sub-section (9) of section73, in respect of thenotice/ statement issued under section 73, but where no order has been issued by the Appellate Authority/ Revisional Authority under sub-section (11) of section107 or subsection (1) of section 108;
(c) Where an order has been issued by the Appellate Authority/ Revisional Authority under sub-section (11) of section107 or subsection (1) of section 108, in the cases where notice/ statement was issued under section 73 and where no order under sub-section (1) of section 113 has been passed by the Appellate Tribunal;
Payment of Tax
“With respect to a notice or statement referred to in clause (a) of sub-section (1) of Section 128A, i.e., a notice or statement that is yet to be adjudicated, the payment towards the tax demanded in the said notice shall be made by the taxpayer through FORM GST DRC-03.….payment shall be made on or before the date notified under section 128A (1), i.e., on or before 31.03.2025. Where applications are filed in respect of cases referred to in the first proviso to sub-section (1) of section 128A, then the applicants shall be required to make the payment on or before the date notified under section 128A (1) specifically for those cases, i.e., within six months of the communication of the order of the proper officer redetermining the amount of tax to be paid under section 73,” said CBIC in the circular.“It is also clarified that while calculating the amount deductible on account of not being payable in accordance with subsection (5) or sub-section (6) of Section 16, from the amount payable in terms of the notice or statement or order under section 73, as the case may be, taxpayer is required to ensure that such amount is deducted only where ITC has been denied solely on account of contravention of Section 16(4) of the CGST Act and not on any other grounds. The tax officer scrutinising such applications is also required to verify that the said amount that has been deducted by the taxpayer as not payable anymore on account of retrospective insertion of sub-section (5) and sub-section (6) to section 16, was initially denied solely deducted on the basis of contravention of sub-section (4) of section 16,and not on any other grounds. It is further mentioned that, in cases referred to in sub-rule (3) and sub-rule (4) of rule 164, the applicant can file the application for waiver of interest or penalty or both under section 128A, in respect of a notice/ statement/ order mentioned in sub-section (1) of section 128A, only after payment of full amount of tax demanded in the said notice/ statement/ order, including on account of demand pertaining to erroneous refund, if any, and also on account of demand pertaining to the period other than the period mentioned in sub-section (1) of section 128A, if any, in the said notice/ statement/ order,” said CBIC in the circular.
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This story originally appeared on: India Times - Author:Faqs of Insurances
