Interest and Penalty Waiver in GST Section 128A-FAQ’s

Q1: What is the purpose of the new Section 128A in the CGST Act?
A1: The purpose of Section 128A is to provide an amnesty scheme to waive off interest and penalties for proceedings under Section 73, for certain periods. This scheme allows taxpayers to pay their outstanding tax liabilities without the burden of additional interest and penalties, subject to specific conditions.

Q2: For which period does the amnesty scheme under Section 128A apply?
A2: The amnesty scheme applies to tax liabilities pertaining to the period from 1st July 2017 to 31st March 2020.

Q3: What conditions must be met to avail of the benefits under Section 128A?
A3: To avail of the benefits under Section 128A:

• The taxpayer must pay the full amount of tax payable as per the notice, statement, or order issued under Sections 73, 107, or 108 on or before the date notified by the Government.
• The proceedings in respect of the notice or order will be deemed concluded, provided no interest under Section 50 and no penalty under the Act shall be payable.

Q4: Does the scheme cover interest and penalties for all types of tax liabilities?
A4: No, the scheme specifically waives interest and penalties for tax liabilities under Section 73. However, it does not apply to erroneous refunds or cases where the taxpayer has already paid the interest and penalties.

Q5: What if the taxpayer has already paid interest and penalties for the covered period?
A5: If the taxpayer has already paid the interest and penalties for the covered period, no refund of such amounts will be available under this scheme.

Q6: Are there any exclusions to the applicability of Section 128A?
A6: Yes, the scheme does not apply to: Any amount payable due to erroneous refunds. Cases where an appeal or writ petition filed by the taxpayer is pending before the Appellate Authority, Appellate Tribunal, or court and has not been withdrawn by the taxpayer on or before the date notified under subsection (1).

Q7: What happens if additional tax becomes payable after an appeal or order by higher authorities?
A7: If additional tax becomes payable following an order by the Appellate Authority, Appellate Tribunal, or court, the taxpayer must pay the additional amount within three months from the date of the said order to conclude the proceedings under this scheme.

Q8: Is it mandatory to withdraw pending appeals or writ petitions to avail of the scheme?
A8: Yes, to avail of the benefits under Section 128A, the taxpayer must withdraw any pending appeals or writ petitions related to the tax liabilities covered under this scheme on or before the date notified by the Government.

Q9: What impact does the scheme have on the right to appeal?
A9: Once the taxpayer has paid the amount as per the scheme, no further appeal under Section 107 or Section 112 shall lie against the order referred to in clause (b) or clause (c) of subsection (1) of Section 128A.

Q10: What is the overall benefit of this amnesty scheme to taxpayers?
A10: The primary benefit of this amnesty scheme is the waiver of interest and penalties, which significantly reduces the financial burden on taxpayers. It also provides a mechanism to conclude pending tax proceedings efficiently, bringing clarity and closure to past liabilities.

Q11: What is the last date to deposit the tax?
A11: The last date to deposit the tax is 31st March 2025.

Q12: Which cases are covered by this?
A12: Any stage of Adjudication Appeal Tribunal

Q13:Do we need to file appeal to get the benefit of this provision?
A13: No, Once the tax is paid the benefit is automatic. No need to file any appeal for that.

Q14: What a person is required to do to get the benefit of this section?
A14: Notice- Pay the tax

Order-DRC -07- Pay the Tax

Appeal- Pay tax and withdraw appeal.

Q15: Can department file an appeal against the waiver under this section?
A15: No

Q16: If the notice was issued in 74 but was shifted to 73 later on in litigation, whether this provision will apply?
A16: Yes