ALL ABOUT SECTION 128A

WAIVER OF INTEREST OR PENALTY OR BOTH RELATING TO

DEMANDS RAISED UNDER SECTION 73, FOR CERTAIN TAX
PERIODS

By FCA Pratibha Singh

 ALL ABOUT SECTION 128A

SECTION 128A

1. HISTORY OF SECTION 128A:

Section 128A of the CGST Act is inserted vide Clause 142 of the Finance Bill (No. 2) of 2024. The said
section is made effective vide clause (a) of Notification No. 17/2024-Central Tax dated 27/09/2024 from
27/09/2024.

2. PURPOSE OF INTRODUCTION OF SECTION 128A:

The section is introduced with an aim at reducing litigation in non-fraud cases. The basic idea is to reduce
the pendency of cases which are open to litigation and there are no frauds involved. The government has
kept a power with itself to reject applications made under the section and rules thereof in a limited time
frame after opting for this scheme.

3. NOTIFIED DATE UNDER SECTION 128A:

As per Notification No. 21/2024 - Central tax dated 8th October 2024,

1. Covered by provisions of Section 128A(1):

31.03.2025 has been notified under sub-section (1) of section 128A of CGST Act as the date on or before
which the full payment of tax demanded in the notice/ statement/ order needs to be made by the taxpayer in
order to avail the benefit of waiver of interest or penalty or both under the said section

2. Covered by the first proviso to Section 128A (1):

Six months from the date of issuance of such order by the proper officer redetermining the tax under
section 73 of CGST Act.

4. CONTENT OF SECTION 128A:

Section Heading: Waiver of interest or penalty or both relating to demands raised under section 73, for
certain tax periods.

Sec 128A(1): Scope of Section 128A.

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS ACT, where
any
amount of tax is payable by a person chargeable with tax in accordance with, ––

(a) a NOTICE issued under sub-section (1) of section 73, or a statement issued under sub-section
(3) of section 73, and where no order under sub-section (9) of section 73 has been issued; or

(b) an ORDER passed under sub-section (9) of section 73, and where no order under sub- section
(11) of section 107 or sub-section (1) of section 108 has been passed; or

(c) an ORDER passed under sub-section (11) of section 107 or sub-section (1) of section 108, and
where no order under sub-section (1) of section 113 has been passed,

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pertaining to the PERIOD FROM 1ST JULY 2017 TO 31ST MARCH, 2020, OR A PART THEREOF,
and the said person PAYS THE FULL AMOUNT OF TAX PAYABLE as per the notice or statement or the
order referred to in clause (a), clause (b) or clause (c), as the case may be, ON OR BEFORE THE DATE,
as may be notified by the Government on the recommendations of the Council, NO INTEREST UNDER
SECTION 50 AND PENALTY under this Act, SHALL BE payable and ALL THE PROCEEDINGS in
respect of the said notice or order or statement, as the case may be, SHALL BE DEEMED TO BE
CONCLUDED, subject to such conditions as may be prescribed:

CA Pratibha singh Comment:

Notified Date: 31/03/2025.

The easiest way to understand the scope is to put it in a question-answer form. The same is as under:

1. What is covered?
a. Notice u/s 73(1) is issued or Statement u/s 73(3) is issued and no order is passed.
b. Order u/s 73(9) and where no order is passed u/s 107(11) or u/s 108(1)
c. Order u/s 107(11) or u/s 108(1) issued and no order u/s 113(1) is passed.

2. What is not covered?

Anything other than the above

3. What period is covered?

The period starting from 01/07/2017 to 31/03/2020 or part thereof. (Starting of GST up to FY 2019-
20)

4. What period is not covered?

Period starting from 01/04/2020 and onwards. (FY 2020- 21 onwards)

5. What is the relief granted?

The taxpayer is neither supposed to pay any interest under section 50 nor any penalty leviable under
this act in respect of the said notice or order or statement.

6. What happens to the notice/statement/order as the case may?

The said notice or order or statement, as the case may be, shall be deemed to be concluded

7. Is the waiver conditional or unconditional?

It is a conditional waiver.

First Proviso to Sec 128A(1):

Provided that where a notice has been issued under subsection (1) of section 74, and an order is passed or
required to be passed by the proper officer in pursuance of the direction of the Appellate Authority or
Appellate Tribunal or a court in accordance with the provisions of sub-section (2) of section 75, the said
notice or order shall be considered to be a notice or order, as the case may be, referred to in clause (a) or
clause (b) of this sub-section:

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CA Pratibha singh Comment:
Section 75(2) of the CGST Act is reproduced below for your quick and easy reference:

“Where any Appellate Authority or Appellate Tribunal or court concludes that the notice issued
under sub-section (1) of section 74 is not sustainable for the reason that the charges of fraud or
any wilful-misstatement or suppression of facts to evade tax has not been established against the
person to whom the notice was issued, the proper officer shall determine the tax payable by such
person, deeming as if the notice were issued under sub-section (1) of section 73.”

In simple language, section 75(2) says that where the charges of fraud, etc. are not sustainable,
the proceedings shall be deemed to continue u/s 73(1) and not u/s 74(1).

As per proviso (1), such notices/statements/orders, etc. are eligible for the relief u/s 128A.

Second Proviso to Sec 128A(1):

Provided further that the conclusion of the proceedings under this sub-section, in cases where an
application is filed under sub-section (3) of section 107 or under sub-section (3) of section 112 or an
appeal is filed by an officer of central tax under sub-section (1) of section 117 or under sub-section
(1) of section 118 or where any proceedings are initiated under sub-section (1) of section 108, against an
order referred to in clause (b) or clause (c) or against the directions of the Appellate Authority or the
Appellate Tribunal or the court referred to in the first proviso, SHALL BE SUBJECT TO THE
CONDITION that the said person pays the ADDITIONAL AMOUNT OF TAX PAYABLE, if any, IN
ACCORDANCE WITH THE ORDER of the Appellate Authority or the Appellate Tribunal or the court or
the Revisional Authority, as the case may be, WITHIN THREE MONTHS FROM THE DATE OF THE
SAID ORDER:

CA Pratibha singh Comment:

As per proviso (2), any additional amount of tax, if any which is payable on account of the
following orders needs to be paid within 3 months from the date of the said order.

Sections covered:
1. Application u/s 107(3) or
2. Application u/s 112(3) or
3. Application u/s 117(1) or
4. Application u/s 118(1) or
5. Application u/s 108(1)

The additional amount can be payable on account of:

1. Commissioner (Appeals) increasing the amount of the lower authority.
2. Tribunal increasing the amount of the lower authority.
3. High Court increasing the amount of the lower authority.
4. Supreme increasing the amount of the lower authority.

In order to avail the benefit under this proviso, additional tax needs to be paid by the tax payer.

Third Proviso to Sec 128A(1):

Provided also that where such interest and penalty has already been paid, no refund of the same shall be
available.

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CA Pratibha Singh Comment:
As per proviso (3), No refund will be granted to the taxpayer for the amount of interest or
penalty already paid.

Sec 128A(2): Erroneous Refund needs to be paid back.

NOTHING CONTAINED IN SUB-SECTION (1) SHALL BE APPLICABLE IN RESPECT OF
ANY AMOUNT PAYABLE BY THE PERSON ON ACCOUNT OF ERRONEOUS REFUND.

CA Pratibha Singh Comment:

If the order is for erroneous refund, no relief is available u/s 128A. It needs to be paid back with
interest and penalty, if applicable.

Sec 128A(3): Appeal/Writ needs to be withdrawn in order to avail benefit of Section 128A: Nothing
contained in sub-section (1) shall be applicable in respect of cases where AN APPEAL OR WRIT
PETITION filed by the said person IS PENDING BEFORE APPELLATE AUTHORITY OR
APPELLATE TRIBUNAL OR A COURT, as the case may be, and HAS NOT BEEN WITHDRAWN
by
the said person on or before the date notified under sub-section (1).

CA Pratibha Singh Comment:

The taxpayer needs to decide on the remedy sought by it. The taxpayer can either continue
with the appeal or the writ filed by it at the appropriate level or can opt for the relief provided
u/s 128A. The taxpayer cannot opt for both the remedies simultaneously.

Sec 128A(4): Order passed u/s 128A(1) are not appealable orders.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, where any amount specified under
sub-section (1) has been PAID AND THE PROCEEDINGS ARE DEEMED TO BE
CONCLUDED
under the said sub-section, NO APPEAL under sub-section (1) of section 107 or sub-section (1) of section
112 SHALL LIE AGAINST an order referred to in clause (b) or clause (c) of sub-section (1), as the case
may be.”.

CA Pratibha Singh Comment:

Once the amount is paid by the taxpayer and the matter is deemed to be concluded under this
section, no appeal by the taxpayer shall lie against the order u/s 107(1) or section 112(1)
against the order.

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RULE 164

1. HISTORY OF RULE 164:

Rule 164 is newly inserted after Rule 163 vide Notification No. 20 – Central Tax dated 08/10/2024 and is
effective from 01/11/2024.

2. CONTENT OF RULE 164:

Explanation.–
For the purposes of this rule, the proper officer for issuance of order under this rule,–
(a) in cases where the application for waiver of interest, or penalty, or both is made with respect to a notice
or statement mentioned in clause (a) of sub-section (1) of section 128A, shall be the proper officer for
issuance of order as per section 73; and

(b) in cases where the application for waiver of interest, or penalty, or both, is made with respect to an
order mentioned in clause (b) or clause (c) of sub-section (1) of section 128A, shall be the proper officer
referred to in section 79 of the Act.”.

CA Pratibha Singh Comment:

This rule is applicable to the whole of Rule 164. It discusses as to who is the proper officer as
referred to in Rules at various places.

Clause (a): Notice/Statement mentioned in 128A(1)(a)

The proper officer is the officer who is responsible for issuance of order under section 73 and
NOT THE OFFICER who has issued SCN in case both are different.

Clause (b): Order as mentioned in 128A(1)(b)/(c)

The proper officer as referred to in section 79.

Rule 164: Procedure and conditions for closure of proceedings under section 128A in respect of
demands issued under section 73.

Rule 164(1): FORM GST SPL-01 (for notice/statement) needs to be filed by eligible person Any
person who is eligible for waiver of interest, or penalty, or both IN RESPECT OF A NOTICE OR A
STATEMENT mentioned in clause (a) of sub-section (1) of section 128A, may file an application
electronically in FORM GST SPL-01 on the common portal, providing the details of the said notice or the
statement, as the case may be, along with the details of the payments made in FORM GST DRC-03
towards the tax demanded.

CA Pratibha Singh Comment:

The taxpayer is required to file an application in FORM GST SPL-01 along with proof of
payment in FORM GST DRC-03 when a notice/statement is issued but the order is not issued.

Rule 164(2): FORM GST SPL-02 (for orders) needs to be filed by eligible person
Any person who is eligible for waiver of interest, or penalty, or both, IN RESPECT OF ORDERS
mentioned in clauses (b) and (c) of sub-section (1) of section 128A, may file an application electronically
in FORM GST SPL-02 on the common portal, providing the details of the said order, along with the
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details of the payments made towards the tax demanded:

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CA Pratibha Singh Comment:
The taxpayer is required to file an application in FORM GST SPL-02 along with proof of
payment in FORM GST DRC-03 when an order is issued.
First Proviso to Rule 164(2):
Provided that the payment towards such tax demanded shall be made only by crediting the amount in the
electronic liability register against the debit entry created by the said order:

CA Pratibha Singh Comment:

The taxpayer is required to make the payment only by crediting the amount in electronic liability
ledger that is made against the order.

Second Proviso to Rule 164(2):

Provided further that if the payment towards such tax demanded has been made through FORM GST
DRC-03, an application in FORM GST DRC-03A, as prescribed in sub-rule (2B) of rule 142, shall be
filed by the said person for credit of the said amount in the Electronic Liability Register against the debit
entry created for the said demand, before filing the application in FORM GST SPL 02.

CA Pratibha Singh Comment:

If the taxpayer has made payment in FORM GST DRC-03, an application in FORM GST DRC-03A
needs to be filed before filing the application in FORM GST SPL-02.

Rule 164(3): Full tax amount for all reasons needs to be paid before filing application.
Where the notice or statement or order mentioned in sub-section (1) of section 128A includes demand of
tax, PARTIALLY ON ACCOUNT OF ERRONEOUS REFUND AND PARTIALLY FOR
OTHER REASONS, an application under sub-rule (1) or sub-rule (2) may be filed only after payment of
the full amount of tax demanded in the said notice or statement or order, on or before the date notified
under the said sub-section.

CA Pratibha Singh Comment:

Notice/Statement/Order contains demands on account of two grounds:
1. Partly – Erroneous Refunds
2. Partly – Other Grounds

The taxpayer is supposed to file the application only after making the full amount of tax
demanded on or before the notified date.

Rule 164(4): Full tax amount for all periods needs to be paid before filing application.
Where the notice or statement or order mentioned in sub-section (1) of section 128A includes demand of
tax, PARTIALLY FOR THE PERIOD MENTIONED IN THE SAID SUB-SECTION AND
PARTIALLY FOR THE PERIOD OTHER THAN THAT MENTIONED IN THE SAID SUB-
SECTION,
an application under sub-rule (1) or subrule (2) may be filed only after payment of the full amount of tax
demanded in the said notice or statement or order, on or before the date notified under the said sub-section.

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CA Pratibha Singh Comment:
Notice/Statement/Order contains demands on account of two grounds:
1. Partly – Period covered u/s 128A
2. Partly – Period NOT covered u/s 128A
The taxpayer is supposed to file the application only after making the full amount of tax
demanded on or before the notified date.

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Rule 164(5): Liability u/s 16(4) of the respective periods will be excluded from liability.
The amount payable under sub-rule (1) or sub-rule (2) shall be the amount that remains payable, after
deducting the amount not payable in accordance with sub-section (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.

CA Pratibha Singh Comment:

Notice/Statement/Orders contains demands on account of two grounds:
1. Partly – Matters of section 16(4)
2. Partly – Matters other than section 16(4)

The taxpayer is supposed to file the application only after making the full amount of tax
excluding tax demanded u/s 16(4).

Rule 164(6): Application to be filed within 3 months.

Any person who wishes to file an application under sub-rule (1) or sub-rule (2), may do so within a period
of three months from the date notified under sub-section (1) of section 128A:

CA Pratibha Singh Comment:

Application under Rule 164(1) or 164(2) needs to be filed within 3 months from notified date
of Section 128A(1).

Notified Date u/s 128A: 31/03/2025.

Last Date to File application under Rule 164(6): 30/06/2025.

Proviso to Rule 164(6):

Provided that where an application in FORM GST SPL-02 is to be filed in cases referred to in the first
proviso to sub-section (1) of section 128A, the time limit for filing the said application shall be six months
from the date of communication of the order of the proper officer redetermining such tax under section 73.

CA Pratibha Singh Comment:

Application under Rule 164(1) or 164(2) needs to be filed within 3 months from notified date
of Section 128A(1).

Rule 164(7): Documents of appeal/writ withdrawal needs to be accompanied with application.

The application under sub-rule (1) or sub-rule (2) shall be accompanied by documents evidencing
withdrawal of appeal or writ petition, if any, filed before any Appellate Authority, or Tribunal or Court, as
the case may be, to establish that the applicant is eligible for the waiver of interest or penalty or both, in
terms of section 128A:

CA Pratibha Singh Comment:

Application under Rule 164(1) or 164(2) shall be accompanied with the proof that the
appeal/writ petition if any filed before the Appellate Authority/Tribunal/Court is withdrawn.
This is done in order to ensure that the applicant is eligible for the waiver of interest/penalty
or both.

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Proviso to Rule 164(7):
Provided that where the applicant has filed an application for withdrawal of an appeal or writ petition
filed before the Appellate Authority or Appellate Tribunal or a court, as the case may be, but the order for
withdrawal has not been issued by the concerned authority till the date of filing of the application under
sub-rule (1) or sub-rule (2), the applicant shall upload the copy of such application or document filed for
withdrawal of the said appeal or writ petition along with the application under sub-rule (1) or sub-rule (2),
and shall upload the copy of the order for withdrawal of the said appeal or writ petition on the common
portal, within one month of the issuance of the said order for withdrawal by the concerned authority.

CA Pratibha Singh Comment:

Where after filing for withdrawal of appeal, the concerned authority has not passed the order
for withdrawal of the same, the applicant shall upload copy of such application. Once the
concerned authority issues the order for withdrawal of the appeal/writ, the same shall be
uploaded on the common portal within 1 month of the issuance of the order.

Rule 164(8): PO to issue notice in FORM GST SPL-03 before rejecting the application.
Where the proper officer is of the view that the application made in FORM GST SPL-01 or FORM GST
SPL-02 is liable to be rejected as not being eligible for waiver of interest, or penalty, or both, as per section
128A, he shall issue a notice on the common portal to the applicant in FORM GST SPL-03 within three
months from the date of receipt of the said application and shall also give the applicant an opportunity of
being heard.

CA Pratibha Singh Comment:

If the PO is of the view that the applicant is not eligible for the waiver under this act, the PO
shall issue a notice in FORM GST SPL-03 on the common portal within 3 months from the date
of receipt of the said application. The PO should give an opportunity of being heard to the
applicant before passing the order.

Rule 164(9): Applicant to file reply in FORM GST SPL-04.

On receiving the notice under sub-rule (8), the applicant may file a reply to the said notice on the common
portal in FORM GST SPL-04, within a period of one month from the date of receipt of the said notice.

CA Pratibha Singh Comment:

The applicant may file a reply in FORM GST SPL-04 within a period of 1 month from the date of
receipt of notice in FORM GST SPL-03.

Rule 164(10): PO to issue order in FORM GST SPL-05.

If the proper officer is satisfied that the applicant is eligible for waiver of interest and penalty as per section
128A, he shall issue an order in FORM GST SPL-05 on the common portal accepting the said application
and concluding the proceedings under section 128A.

CA Pratibha Singh Comment:

If the PO is satisfied that the applicant is eligible for waiver of interest/penalty, he shall issue an
order in FORM GST SPL-05 on the common portal.

Rule 164(11): Effects of issuance of FORM GST SPL-05.

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In cases where the order in FORM GST SPL-05 is issued by the proper officer under sub-rule (10).–

(a) in respect of an application filed in FORM GST SPL-01 pertaining to a notice or statement
referred to in clause (a) of sub-section (1) of section 128A, the summary of order in FORM GST
DRC-07 as per sub-rule (5) of rule 142 shall not be required to be issued by the proper officer, in
respect of the said notice or statement;

(b) in respect of an application filed in FORM GST SPL-02 pertaining to an order referred to in
clause (b) or clause (c) of sub-section (1) of section 128A, the liability created in the part II of
Electronic Liability Register, shall be modified accordingly.

CA Pratibha singh Comment:

Clause (a): Where FORM GST SPL-01 is filed
The PO shall not issue order in FORM GST DRC-07.

Clause (b): Where FORM GST SPL-02 is filed

The liability created in the Part II of Electronic Liability Register shall be modified accordingly.

Rule 164(12): PO can reject reply of the applicant and issue order in FORM GST SPL-07.
If the proper officer is not satisfied with the reply of the applicant, the proper officer shall issue an order in
FORM GST SPL-07 rejecting the said application.

CA Pratibha singh Comment:

If the PO is not satisfied with the applicant reply, he shall pass the order rejecting the
application in FORM GST SPL-07.

Rule 164(13): PO to decide the status of application in 3 months.

(a) In cases where notice in FORM GST SPL-03 has not been issued, the proper officer shall issue the
order under sub-rule (10) within a period of three months from the date of receipt of the application in
FORM GST SPL-01 or FORM GST SPL-02, as the case may be.

(b) In cases where notice in FORM GST SPL-03 has been issued, the proper officer shall issue the order
in sub-rule (10) or sub-rule (12) within a period of three months from the date of receipt of reply of the
applicant in FORM GST SPL-04, or within a period of four months from the date of issuance of notice in
FORM GST SPL-03 where no reply is received from the applicant.

Explanation.–
For the purposes of this sub-rule, in cases referred to in the proviso to sub-rule (7), the time period from the
date of filing of the application under sub-rule (1) or sub-rule (2) till the date of submission of the order for
withdrawal of the appeal or the writ, as the case may be, shall not be included while calculating the time
period under clause (a) or clause (b) of this sub-rule.

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CA Pratibha singh Comment:
Clause (a): Where FORM GST SPL-03 is not issued.
The PO shall issue order in FORM GST SPL-05 within 3 months from the date of receipt of the
application in FORM GST SPL-01/02.

Clause (b): Where FORM GST SPL-03 is issued.

Case 1: Applicant furnishes a reply:
The PO shall issue order in FORM GST SPL-05/07 within 3 months from the date of receipt of
the reply in FORM GST SPL-04.

Case 2: Applicant does not furnish a reply:

The PO shall issue order in FORM GST SPL-05/07 within 4 months from the date of issuance of
the notice in FORM GST SPL-03.

As per the Explanation, if the order of withdrawal is not passed, the period between the date of
application to the date of passing of the said order shall not be included while calculating the
above-mentioned period of 3/4 months.

Rule 164(14): If no order is issued timely, application is deemed to be approved.

If no order is issued by the proper officer within the time limit specified in sub-rule (13), then the
application in FORM GST SPL-01 or FORM GST SPL-02, as the case may be, shall be deemed to be
approved and the proceedings shall be deemed to be concluded.

CA Pratibha singh Comment:

If the PO does not issue the order timely, the application in FORM GST SPL-01 or FORM GST
SPL-02 is deemed to be approved and all proceedings are deemed to be concluded.

Rule 164(15):
(a) In cases where no appeal is filed against the order in FORM GST SPL-07 within the time period
specified in sub-section (1) of section 107, the original appeal, if any, filed by the applicant against the
order mentioned in clause (b) or clause (c) of sub-section (1) of section 128A, and withdrawn for filing the
application in FORM GST SPL-02 in accordance with sub-section (3) of section 128A, shall be restored.

(b) In cases where an appeal is filed against the order in FORM GST SPL-07 for rejection of application
for waiver of interest, or penalty, or both, if—

(i) the appellate authority has held that the proper officer has wrongly rejected the application for
waiver of interest, or penalty, or both, in FORM GST SPL-07, the said appellate authority shall
pass an order in FORM GST SPL-06 on the common portal accepting the said application and
concluding the proceedings under section 128A; or

(ii) the appellate authority has held that the proper officer has rightly rejected the application for
waiver of interest, or penalty, or both, in FORM GST SPL-07, the original appeal, if any, filed by
the applicant against the order mentioned in clause (b) or clause (c) of sub-section (1) of section
128A, and withdrawn for filing the application in FORM GST SPL-02 in accordance with sub-

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section (3) of section 128A, shall be restored, subject to condition that the applicant files an
undertaking electronically on the portal in FORM GST SPL-08, within a period of three months
from the date of issuance of the order by the appellate authority in FORM GST APL-04, that he has
neither filed nor intends to file any appeal against the said order of the Appellate Authority.

CA Pratibha singh Comment:

Clause (a): The applicant chooses not to appeal against the order passed in FORM GST SPL-01.
The PO has passed order in FORM GST SPL-07 stating that the applicant was not eligible for
the benefit of Section 128A. The applicant chose not to appeal against the same. In this case,
the application made under section 128A shall be considered to be invalid and the original
appeal which was filed by the applicant and later withdrawn will stand restored.

Clause (b): The applicant chooses to appeal against the order passed in FORM GST SPL-01.

(i) The appellate authority decides the matter in favour of the applicant.
The authority has held that the PO was wrong in rejecting the application, it shall pass an order
in FORM GST SPL-06 on the common portal and the provisions of Sec 128A continues to
apply.

(ii) The appellate authority decides the matter in favour of the proper officer.
The authority has held that the PO was right in rejecting the application, it shall pass an order
in FORM GST SPL-06 on the common portal and the original appeal filed under the provisions
of Sec 107/108 shall be restored subject to an undertaking wherein the applicant forgoes his
right to file an appeal against this order.
Rule 164(16): Additional payment needs to be made timely, else the order becomes void. In cases
where the taxpayer is required to pay an additional amount of tax liability as per the second proviso to
sub-section (1) of section 128A, and such additional payment is not made within the time limit specified in
the said proviso, the waiver of interest, or penalty, or both, under the said section as per the order issued
in FORM GST SPL-05 or FORM GST SPL-06, if any, shall become void.

CA Pratibha singh Comment:

When the taxpayer is required to make additional payment of tax and he does not make the
payment within the specified time limit, the order issued in FORM GST SPL-05 or FORM GST
SPL-06 shall become void.

Rule 164(17): Interest/Penalty to be paid.

In cases where the taxpayer is required to pay any amount of interest, or penalty, or both, in respect of any
demand pertaining to erroneous refund or on account of demand pertaining to the period other than the
period mentioned in sub-section (1) of section 128A, and the details of such amount have been mentioned
in FORM GST SPL-05 or FORM GST SPL-06, the applicant shall pay the said amount of interest, or
penalty, or both, WITHIN A PERIOD OF THREE MONTHS from the date of issuance of the order in
FORM GST SPL-05 or FORM GST SPL-06, as the case may be, and where the said amount is not paid
within the said time period, the waiver of interest, or penalty, or both, under section 128A as per the order
issued in FORM GST SPL-05 or FORM GST SPL-06, shall become void.

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CA Pratibha singh Comment:
The applicant will have to pay interest/penalty/both in case of erroneous refund within a
period of 3 months

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CIRCULARS ON SECTION 128A AND RULE 165.

1. Circular No. 238/32/2024-GST dated 15/10/2024.

Clarifications issued in the Circular

S. Issue Clarification
No.
1 Whether the benefit provided In this regard, it is to be mentioned that all such amount paid
under Section 128A will be towards the said demand upto the date notified under sub-
applicable to taxpayers who have section (1) of section 128A, irrespective of whether the said
paid the tax component in full payment has been done before Section 128A comes into
before the date on which the said effect, or after that, and irrespective of whether such
section has come into effect? 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 upto the
date notified under sub-section (1) of section 128A and was
intended to be paid towards the said demand.

2 Whether amount recovered by the Yes.

tax officers as tax due from any
other person on behalf of the The said amount recovered by the tax officers as tax due
taxpayer, against a particular from any other person on behalf of the taxpayer against a
demand can be considered as tax demand, shall also be considered as the tax paid towards the
paid towards the same for the said demand, for the purpose of section 128A provided the
purpose of Section 128A? same has been recovered on or before the date notified
under sub-section (1) of
section 128A.
3 Whether the amount recovered by No.
the tax officers as interest or
penalty or both, pertaining to
demand under Section 73 It is mentioned that as per the third proviso to sub- section
pertaining to Financial Years (1) of section 128A, no refund of such amount of interest or
2017-18, 2018-19 and 2019- penalty or both, is available. Accordingly, any amount paid
20, can be adjusted against the tax by the taxpayer or recovered by the tax officers, as interest
amount payable towards the or penalty cannot be adjusted towards the amount payable as
demand made under tax.
Section 73 pertaining to the said
financial years?

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4 Whether the benefit provided Where the tax due has already been paid and the notice or
under Section 128A will be demand orders under Section 73 only pertains to interest
applicable in cases, where the tax and/or penalty involved, the same shall be considered for
due has already been paid and the availing the benefit of section 128A.
notice or demand orders under
Section 73 only pertains to However, the benefit of waiver of interest and penalty shall
interest and/or penalty involved? 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

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demand of tax dues and is directly recoverable under sub-
section (12) of section 75.
5 Whether the benefit under Section No.
128A is available, if the taxpayer
intends to avail partial waiver of Section 128A (1) clearly provides that the waiver of interest
interest or penalty or both, on or penalty or both is only applicable when the full amount of
certain issues, by making part tax demanded in the notice/ statement/ order is paid.
payment of the amount demanded
in the notice/ statement/ order, as
the case may be, and opts to
litigate for the remaining issues?

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6 Where the notice/order involves The taxpayer is eligible to apply for waiver of interest or
multiple periods, ranging from the penalty or both, in such cases where the demand notice/
period for which waiver provided order spans tax periods covered under Section 128A and
in Section 128A is applicable, and those not covered under the said section. However, as per
includes some other tax periods sub-rule (4) of Rule 164, the taxpayer shall be required to
for which such waiver is not pay the full amount of tax demanded in the notice/ statement
applicable, whether the benefit of / order, as the case may be, to avail the benefit of waiver of
waiver of interest or penalty or interest or penalty or both under Section 128A.
both under Section 128A can be
availed for the period covered Further, though the amount of tax demanded shall be
under section 128A? required to be paid as per the notice/ statement / order, as the
case may be, for whole of the period covered under the said
If so, what is the tax amount notice/ statement / order, but the waiver of interest or penalty
payable for claiming waiver under or both under section 128A shall only be applicable for the
Section 128A? period specified in section 128A, and not for the period not
covered under the said section.

On payment of the full amount demanded in the notice/

statement/ order, if the proper officer finds that the applicant
is eligible for waiver of interest or penalty or both for tax
periods covered under Section 128A, he will reduce the
liability to that extent in his order in FORM GST SPL-05,
and the remaining liability of interest or penalty or both for
tax periods not covered under Section 128A, remains
payable by the taxpayer.

The said amount shall be required to be paid by the

applicant within three months from the date of issuance of
order in FORM GST SPL-05 or FORM GST SPL-06, as the
case may be. If the said amount is not paid within the time
limit as mentioned above, the order in FORM GST SPL-05
or FORM GST SPL-06, as the case may be, the waiver of
interest or penalty or both under section 128A as per the
order issued in FORM
GST SPL-05 or FORM GST SPL06, shall become void, as
per sub-rule (17) of rule 164.

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7 Where the notice/ statement/ order Yes.
issued under Section 73 involves
multiple issues and one of them is However, as per sub-rule (3) of Rule 164, the taxpayer shall
regarding demand of erroneous be required to pay the full amount of tax demanded in the
refund, whether an application can notice/ statement / order, as the case may be, including on
be filed for waiver of interest or account of demand of erroneous refund, to avail the benefit
penalty or both under Section of waiver of interest or penalty or both under Section 128A.
128A?
Further, in such cases, the waiver of interest or penalty or
If so, what is the tax amount both under section 128A shall only be available in respect of
payable for claiming waiver under tax demand other than that pertaining to demand of
Section 128A? erroneous refund.

On payment of the full amount demanded in the notice/

statement/ order, if the proper officer finds that the applicant
is eligible for waiver of interest or penalty or both for tax
periods covered under Section 128A in respect of tax
demand other than that pertaining to demand of erroneous
refund, he will reduce the liability to that extent in his order
in FORM GST SPL-05, and the remaining liability of
interest or penalty or both, that corresponds to demand of
erroneous refund, remains payable by the applicant.

The said amount shall be required to be paid by the

applicant within three months from the date of issuance of
order in FORM GST SPL-05 or FORM GST SPL-06, as the
case may be. If the said amount is not paid within the time
limit as mentioned above, the order in FORM GST SPL-05
or FORM GST SPL-06, as the case may be, the waiver of
interest or penalty or both under section 128A as per the
order issued in FORM
GST SPL-05 or FORM GST SPL06, shall become void, as
per sub-rule (17) of rule 164.

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8 In cases where department has Yes, as per the second proviso to section 128A, the
filed an appeal against the order conclusion of proceedings in such cases is subject to the
mentioned in clause (b) or clause condition that the said person pays the additional amount of
(c) of sub-section (1) of section tax payable, if any, in accordance with the order of the
128A and the Appellate Authority Appellate Authority or the Appellate Tribunal or the court
or the Appellate Tribunal or the or the Revisional Authority, as the case may be, within three
court or the Revisional Authority, months from the date of the said order.
has issued an order enhancing the
tax liability, and in the meanwhile Accordingly, it becomes clear that even in cases where an
the proper officer has issued an order in FORM GST SPL-05 or in FORM GST SPL-06 has
order in FORM GST SPL-05 been issued the conclusion of the said proceedings will be
under section 128A, and the subject to the condition that the taxpayer pays the
taxpayer has not paid the additional tax amount as determined by the
said additional Appellate Authority or the Appellate Tribunal or the court
amount of tax liability within or the Revisional Authority by an order issued in

the specified time limit, what will the matter of appeal filed by the department, within a period
be the status of the conclusion of of three months from the date of the such order enhancing
proceedings under Section 128A? the tax liability.

In case such additional payment is not done within a period

of three months from the date of the said order, then as per
sub-rule (16) of Rule 164, the waiver of interest or penalty
or both under section 128A as per the order issued in
FORM GST SPL-05 shall become
void.
9 Sub-section (3) of section 128A Yes, in such cases also the applicant will be required to
refers to only appeal or writ withdraw the said special leave petition and file an
petition. In this regard, whether application in FORM GST SPL-01 or FORM GST SPL-02,
matters where SLP filed by the as the case may be, along with proof of withdrawal of SLP
applicant is pending before the or the copy of the application or any other document filed
Supreme Court, what is the for withdrawal of SLP, where the order for withdrawal of
procedure to be followed by the SLP has not been issued at the time of filing application in
taxpayer to avail the waiver of FORM GST SPL-01 or FORM GST SPL-02. In such cases,
interest or the procedure mentioned in para
penalty or both? 3.1.6 may be followed.
10 Whether the benefit provided Yes.
under Section 128A will be
available for matters involving On joint reading of section 20 of the Integrated Goods and
IGST and Compensation Cess? Services Tax Act, 2017 and section 11 of GST
(Compensation to States) Act, 2017 along with section
128A of CGST Act, it becomes clear that the benefit
provided under Section 128A of CGST Act will be available
for matters involving IGST and compensation cess as well.

In this regard, it is mentioned that in such cases, full

payment of tax means payment of CGST, SGST, IGST and
compensation cess demanded in the notice/
statement/ order, as the case may be
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11 Whether Section 128A covers The transitional credit is considered to be availed on the date
cases involving demand of on which the said credit amount is credited in the Electronic
irregularly availed transition Credit Ledger.
credit?
On reading Rule 121 read with sub-rule (3) of rule 117, it is
clear that any demand in respect of transitional credit
wrongly availed, whether wholly or partly can be made
under section 73 or, as the case may be, section
74. Therefore, it is mentioned that if the amount of
transitional credit has been availed in the period covered
under Section 128A and notice for demand of
wrongly availed credit is issued under section 73, the same
is covered under Section 128A.
12 Whether Section 128A will cover It is clarified that any penalty, including penalties under
waiver of penalties under other section 73, section 122, section 125 etc, demanded under
provisions, late fee, redemption the demand notice/ statement/ order issued
fine etc?

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.
13 Whether payment to avail waiver Yes.
under Section 128A can be made
by utilizing ITC? The payment of tax required to be made for eligibility for
waiver under section 128A is the amount of tax demanded
in the notice/ statement/ order. Therefore, it can be paid
either by debiting from 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 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.

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14 Whether the benefit of waiver No.
under Section 128A be availed
qua import IGST payable under In such cases, demand is not issued under section 73 of the
the Customs Act, 1962? CGST Act, but is issued under the provisions of Customs
Act, 1962 and therefore, such cases are not
covered under waiver of interest or penalty or both under
section 128A.
15 With retrospective insertion of Customs Act, 1962 and therefore, such cases are not
sub-sections (5) and (6) to Section covered under waiver of interest or penalty or both under
16 of the CGST Act, the tax section 128A.
demanded in notice/ statement/
order reduces. Sub-rule (5) of rule 164 mentions that the amount payable in
order to avail the benefit under section 128A, shall be
Whether the entire tax amount calculated after deducting the amount not payable in
demanded in the notice/ statement/ accordance with sub-section (5) or sub- section (6) of
order has to be paid in such cases, Section 16, from the amount payable in terms of the notice
to avail the benefit under section or statement or order under section 73, as the case may be.
128A?
Therefore, the applicant is required to pay only the amount
that is payable, calculated after deducting the amount not
payable in accordance with sub-section (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, before submitting the
application. While calculating the amount

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deductible on account of not being payable in accordance
with sub-section (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.
He is also advised to provide a breakup of the amount not
payable by him anymore, as per sub-sections (5) and (6) of
section 16, in FORM GST SPL-01 or FORM GST SPL-02,
as the case may be, to enable the officer to verify the
payment easily.

It is also re-iterated that where the taxpayer is deducting the

amount of ITC which was denied on account of
contravention of sub-section (4) of section 16 of the CGST
Act, but which is now available, as per retrospectively
inserted provisions of sub-section (5) or sub-section (6) of
section 16 of the CGST Act, he is not required to file
application for rectification in respect of the same as per
special procedure notified
under Section 148 vide notification No. 22/2024- Central
tax dated 8th October 2024.

16 In case of application in FORM Yes.

GST SPL-02, where the applicant
has paid full or partial amount of In cases where order in FORM GST DRC-07, FORM GST
tax through FORM GST DRC-03, DRC-08 or FORM GST APL-04, as the case may be, has
whether the said applicant is been issued and such taxpayer has paid required amount
mandatorily required to file through FORM GST DRC-03, such applicant is required to
application in FORM GST DRC- adjust the said amount towards the demand created in the
03A for such tax amount which he Electronic Liability Register, as per the second proviso to
desires to get adjusted against tax sub-rule (2) of rule 164, before filing the application in
demand as per FORM GST DRC- FORM GST SPL-02.
07/ FORM GST
DRC-08/ FORM GST APL-04?

GSTN PORTAL ADVISORY:

1. Link - https://www.gst.gov.in/newsandupdates/read/546

Date: Nov 8th, 2024

Content of the Advisory:

For reducing the tax disputes and to provide a big relief to the taxpayers, GST Council in its 53rd
meeting held on 22nd June, 2024 had recommended for waiver of interest and penalties in the
demand notices or orders issued under Section 73 of the CGST Act, 2017 (i.e. the cases not
involving fraud, suppression or wilful misstatement, etc.) for the Financial years 2017-18, 2018-19
and 2019-20. To avail this waiver, the condition is that the full tax demanded is paid on or before
31.03.2025.
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In view of the above, Rule 164 of CGST rules, 2017 was notified through Notification No. 20/2024
dated. 8th October 2024, effective from 1st November 2024. This rule provides procedural
guidelines for the said waiver scheme. As per the waiver scheme, if a notice or order is issued
under Section 73 for the financial years 2017-18, 2018-19 and 2019-20, the taxpayers are required
to file an application in FORM GST SPL-01 or FORM GST SPL-02, respectively on the common
portal within three months from notified date, which is 31.03.2025.

In this regard it is to inform that Form GST SPL-01 and Form GST SPL-02 are under development
and same will be made available on the common portal tentatively from the first week of January
2025. In the meantime, taxpayers are advised to pay the tax amount demanded in the notice,
statement, or order issued under Section 73 on or before March 31st, 2025, to ensure that they
receive the waiver benefits by paying their taxes before the deadline.

Taxpayer can pay the demanded tax amount through the “payment towards demand” facility in case
of demand orders and through Form GST DRC-03 in case of notices. However, if payment has
already been done through Form GST DRC-03 for any demand order then taxpayer need to link the
said Form GST DRC 03 with such demand order through Form GST DRC-03A, which is now
available on the common portal.

Thanking You,
Team GSTN

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HOW TO FILE THE SAID APPLICATON ON THE GSTN PORTAL:

1. How to navigate to file the application on the Portal?

Dashboard > Services > User Services > My Applications

2. Click on New Application

3. Select the one which is applicable in your case & proceed further. We have selected SPL-01 and
then click on Create Application. The following screen would appear:

4. Depending on what your case is, answer the following questions and click on Next.

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5. If you select SPL-02 instead of SPL-01, the following screen would appear:

6. Depending on what your case is, answer the following questions and click on Next.

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