Section 128A gives waiver of interest or penalty relating to demand raised u/s 73 for the period 01-07-2017 to 31-03-2020. Rule 164 has been introduced which provides for procedure and conditions for closure of proceedings u/s 128A.

Section 128A shall be applicable in following cases for waiver of interest and penalties

Section 128A(1)

Notwithstanding anything to the contrary contained in this Act,

where any tax is payable by a person pertaining to period 01-07-2017 to 31-03-2020, or part there of, in accordance with,–

(a) a notice issued u/s 73(1) or a statement issued u/s 73(3), and where no order has been issued u/s 73(9); or

(b) an order passed u/s 73(9), and where no order has been passed u/s 107(11) or 108(1); or

(c) an order passed u/s 107(11) or 108(1), and where no order has been passed  113(1),

Section 128A gives waiver of interest or penalty only for the period 01-07-2017 to 31-03-2020.

1^st Proviso to Section 128A(1)

where a notice has been issued u/s 74(1) 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 section 75(2)

the said notice or order shall be considered to be a notice or order, referred to in clause (a) or clause (b) of this sub-section:

Para 3.1.2 of Circular no. 238/32/2024-gst

In cases where a notice was initially issued u/s 74, and an order is passed or required to be passed by the proper officer u/s 73 (in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court in accordance with the provisions of section 75(2)),

those cases are also covered u/s 128A for the purpose of waiver of interest or penalty or both.

Section 128A shall not be applicable in following cases

Section 128A(2)

Nothing contained in sub-section (1) shall be applicable

in respect of any amount payable by the person on account of erroneous refund.

Section 128A(3)

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and such appeal or writ petition has not been withdrawn by the said person on or before the date notified u/ss (1).

Section 128A(1)

Interest or penalties shall be waived off only if

Person pays the full amount of tax as payable in notice/ statement/ order referred in section 128A(1),

on or before 31-03-2025, as notified by the Government,

Interest/ penalty shall be waived off only if full amount of tax demanded in notice/statement/order on or before notified date.

Vide N No-21/2024-CT, Govt has notified 31-03-2025 as the date on or before which payment u/s 128(1) should be made.

Vide N No-21/2024-CT, Govt has notified following date on or before which payment should be made.

SN

Cases

Notified Date

(a)

For cases covered u/s 128(1)(a), (b) or (c)

31.03.2025

(b)

For cases covered in 1^st Proviso to Section 128A(1)

Date ending on completion of 6 months from the date of issuance of the order by PO for redetermining tax u/s 73.

Rule 164(5)

The amount payable for waiver of interest/penalties shall be

Demand of tax as per notice/ statement/ order u/s 73 (-) amount not payable as per section 16(5) or (6).

Para 3.2.4 of Circular no. 238/32/2024-gst

In cases where the amount of tax payable as per the notice/ statement/ order includes the amount that was demanded due to contravention of provisions of section 16(4), which is however not payable anymore due to the retrospective insertion of section 16(5) and 16(6),

the full amount of tax payable as per the notice/ statement/ order shall be calculated after deducting the amount, which is not payable anymore as per sections 16(5) or 16(6).

Filing of Application for Rectification as per Notification no. 22/2024-CT not required

In above case, he is also not required to file an application for rectification for the same in terms of the special procedure notified u/s 148 vide notification No. 22/2024- Central tax dated 8th Oct 2024

For filing of application for rectification please click here

Para 3.2.5 of Circular no. 238/32/2024-gst

It is also clarified that while calculating the amount deductible on account of not being payable u/s 16(5) or (6), 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 section 16(5) and 16(6), was initially denied solely deducted on the basis of contravention of section 16(4) of section 16, and not on any other grounds.

Rule 164(3)

Where notice/ statement or order referred in section 128A(1) includes demand of tax

partially on account of erroneous refund and

partially for other reasons,

then an application in SPL-01/02 u/sr (1) or (2) may be filed only after payment of the full amount of tax demanded

on or before the date notified u/s 128A(1).

Rule 164(4)

Where notice/ statement or order  referred in section 128A(1) includes demand of tax,

partially for the specified u/s 128A(1) and

partially for the period other than specified period

then an application in SPL-01/02 u/sr (1) or (2) may be filed only after payment of the full amount of tax demanded

on or before the date notified under the said sub-section.

Para 3.2.6 of Circular no. 238/32/2024-gst

It is further mentioned that, in cases referred to in sub-rule 164(3) and (4), the applicant can file the application, only after payment of full amount of tax demanded in the notice/ statement/ order referred u/s 128A(1), including

demand pertaining to erroneous refund, if any, and

demand pertaining to the period other than the period mentioned in section 128A(1)

Section 128A(1)

On payment of full amount of tax within notified date

no interest u/s 50 and penalty under this Act, shall be payable and

all the proceedings in respect of the said notice/ statement or order

shall be deemed to be concluded, subject to such conditions as may be prescribed^[R-164]:

3^rd Proviso to Section 128A(1)

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

Section 128A(4)

Notwithstanding anything contained in this Act,

where all the proceedings are deemed to be concluded u/ss (1),

no appeal u/s 107(1) or 112(1) shall lie against an order referred to in clause (b) or (c) of sub-section (1).

Rule 164(1)

Any person who is eligible u/s 128(1)(a) [i.e. notice or statement issued u/s 73(1) or (3), and where no order has been issued u/s 73(9)]

may file an application in GST SPL-01,

providing the details of the said notice or the statement,

along with the details of the payments made in GST DRC-03 towards the tax demanded

Rule 164(2)

Any person who is eligible u/s 128(1)

(b) an order passed u/s 73(9), and where no order has been passed u/s 107(11) or 108(1); or

(c) an order passed u/s 107(11) or 108(1), and where no order has been passed  113(1),

may file an application in FORM GST SPL 02,

providing the details of

order and

payments made towards the tax demanded:

1^st Proviso to Rule 164(2)

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:

In this regard, the procedure mentioned in para 4 of Circular No. 224/18/2024 -GST dated 11th July 2024 may be referred to

2^nd Proviso to Rule 164(2)

If the payment towards such tax demanded has been made through form GST DRC-03,

an application in FORM GST DRC-03A shall be filed 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.

Para 3.2.2 of Circular No. 238/32/2024-GST

The procedure prescribed in rule 142(2B) may be followed.

In such cases, the taxpayer shall be required to file an application in FORM GST DRC-03A as prescribed in the said rule, in order to adjust the amount already paid vide the FORM GST DRC-03, towards the demand created in the ELR-Part II, before filing the application for waiver u/s 128A in FORM GST SPL-02.

For the purposes of determining the date of payment of full amount of tax, the date on which the amount has been paid through FORM GST DRC-03 may be considered and not the date on which the said amount has been adjusted using FORM GST DRC-03A.

Rule 164(6)

Any person who wishes to file an application in SPL-01/02,

may do so within a period of 3 months from the date notified u/s 128A(1) [i.e 31-03-2025]

1^st Proviso to Rule 164(6)

in cases referred to in the first proviso to section 128A(1),

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 u/s 73.

Rule 164(7)

The application in SPL-01/02 u/sr (1) or (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:

1^st Proviso to Rule 164(7)

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 u/sr (1) or (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 u/sr (1) or (2), and

the order for withdrawal of the said appeal or writ petition on the common portal, within 1 month of the issuance of the said order for withdrawal by the concerned authority.

Rule 164(8)

If on examination, proper officer is of the view that the application in SPL-01/ SPL-02 is liable to be rejected as not being eligible for waiver of interest/ penalty, as per section 128A,

he shall

issue a notice on the common portal to the applicant in GST SPL-03 within 3 months from the date of receipt of the said application and

also give the applicant an opportunity of being heard.

Rule 164(9)

On receiving the notice u/sr (8), the applicant may file a reply to the said notice on the common portal in GST SPL-04, within 1 month from the date of receipt of the said notice..

Rule 164(12)

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.

Rule 164(10)

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 GST SPL-05 on the common portal accepting the said application and concluding the proceedings u/s 128A.

Rule 164(11)

In cases where the order in GST SPL-05 is issued by the proper officer u/sr (10).–

(a) in respect of application in SPL-01, summary of order in GST DRC-07, [i.e. u/r 142(5)] shall not be required to be issued by the PO,

(b) in respect of application in SPL-02, the liability created in the part II of Electronic Liability Register, shall be modified accordingly.

Rule 164(13)(a)

In cases where notice in GST SPL-03 has not been issued, the proper officer shall issue the order u/sr (10) within 3 months from the date of receipt of the application in SPL-01/ SPL-02

Rule 164(13)(b)

In cases where notice in GST SPL-03 has been issued,

the proper officer shall issue the order in s/r (10) or rule (12)

within 3 months from the date of receipt of reply in GST SPL-04, or

within 4 months from the date of issuance of notice in SPL-03 where no reply is received from the applicant.

Explanation to Rule 164(13)

For the purposes of this sub-rule,

in cases referred to in the proviso to s/r (7), [Order of withdrawal of appeal late received]

the time period from the date of filing of the application u/sr (1) or (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 u/c (a) or (b) of this sub-rule.

Rule 164(14)

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.

Explanation to Rule 164

For the purposes of this rule, the proper officer for issuance of order under this rule,–

(a) in cases where the application is made u/c 128A(1)(a), shall be the proper officer for issuance of order as per section 73; and

(b) in cases where the application is made u/c 128A,(1)(b) or (c) shall be the proper officer referred to in section 79 of the Act.”.

Rule 164(15)(a)

In cases where no appeal is filed against the rejection order in GST SPL-07 within the time period specified u/s 107(1)

the original appeal, if any, filed by the applicant against the order mentioned in clause 128(1)(b) or (c), and withdrawn for filing the application in GST SPL-02 u/s 128A(3) shall be restored.

Rule 164(15)(b)

In cases where an appeal is filed against the rejection order in GST SPL-07 for rejection of SPL-01/02, if—

(i) the appellate authority has held that the proper officer has wrongly rejected SPL-01/02, the said appellate authority shall pass an order in GST SPL-06 on the common portal accepting the said application and concluding the proceedings u/s 128A; or

(ii) the appellate authority has held that the proper officer has rightly rejected SPL-01/02, the original appeal, if any, filed by the applicant against the order mentioned in clause 128(1)(b) or (c), and withdrawn for filing the application in GST SPL-02 u/s 128A(3), shall be restored, subject to condition that the applicant files an undertaking electronically on the portal in GST SPL-08, within 3 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.

Para 3.4.1 of Circular no. 238/32/2024-gst

No further pre-deposit required for appeal against SPL-07, if already deposited earlier

The order issued in GST SPL-07, rejecting the application for waiver, shall be, however, appealable in u/s 107(1) within the time limit specified therein, by filing an application in FORM GST APL-01.

In such cases, normally, no pre-deposit may be required to be paid by the taxpayer for filing the said appeal, as the said amount may already have been paid as a part of payment of tax dues involved in the demand notice/ statement / order before filing an application in FORM GST SPL-01/02.

However, in cases where no amount of tax dues has been paid or amount of tax dues paid is less than the requisite amount for pre-deposit for filing appeal as per section 107(6), the remaining amount of pre-deposit will be required to be paid for filing the said appeal.

Para 3.4.2 of Circular no. 238/32/2024-gst

Subject matter of the appeal will only be regarding the applicability of waiver of interest or penalty or both under Section 128A and not on the merits of the original notice/ statement/ order.

SPL-05/06 shall become void in following 2 situation after its issue

2^nd Proviso to Section 128A(1)

In cases where

an application is filed u/s 107(3) or 112(3) or

an appeal is filed by an officer of central tax u/s 117(1) or 118(1) or

where any proceedings are initiated u/s 108(1),

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,

the conclusion of the proceedings under this sub-section,

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 3 months from the date of the said order:

Rule 164(16)

In cases where the taxpayer is required to pay an additional amount of tax liability as per the second proviso to section 128A(1), and

such additional payment is not made within the time limit specified in the said proviso,

the waiver of interest/ penalty, under the said section as per the order issued in FORM GST SPL-05 or FORM GST SPL-06, if any, shall become void.

Rule 164(17)

In cases where the taxpayer is required to pay any amount of interest/penalty,

in respect of any demand pertaining to erroneous refund or

on account of demand pertaining to the period other than the period mentioned in section 128A(1),

and the details of such amount have been mentioned in GST SPL-05 or GST SPL-06,

the applicant shall pay the said amount of interest/penalty,

within 3 months from the date of issuance of the order in GST SPL-05 or 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/penalty u/s 128A as per the order issued in FORM GST SPL-05 or FORM GST SPL-06, shall become void.

Para 3.3.9 of Circular no. 238/32/2024-gst

Where it is found that any amount of interest and penalty is payable

on account of demand pertaining to the period other than the period mentioned in section 128A(1) or

pertaining to demand of erroneous refund,

the detail of the same shall be mentioned in column no. 19 and column no. 20 of FORM GST SPL-05 or FORM GST SPL06, as the case may be.

Further, in such cases, an opportunity of personal hearing may be granted to the applicant, before issuance of order in FORM GST SPL-05 or FORM GST SPL-06.

Advisory dated 08-11-2024 issued related to section 128A

Advisory dated 29-12-2024 issued related to section 128A

Para 4 of Circular no. 238/32/2024-gst

Following issues with respect to availing the benefit of waiver of interest or penalty or both provided under Section 128A, are also clarified hereby

SN

Issue

Clarification

1

Whether the benefit provided u/s 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?

Yes

In this regard, it is to be mentioned that all such amount paid towards the said demand upto the date notified u/s 128A(1), 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 Section 128A(1), as long as the said amount has been paid upto the date notified u/s 128A(1) and was intended to be paid towards the said demand.

2

Whether amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer, against a particular demand can be considered as tax paid towards the same for the purpose of Section 128A?

Yes

The said amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer against a demand, shall also be considered as the tax paid towards the said demand, for the purpose of section 128A provided the same has been recovered on or before the date notified u/s 128A(1).

3

Whether the amount recovered by the tax officers as interest or penalty or both, pertaining to demand u/s 73 pertaining to FY 2017-18, 2018-19 and 2019-20, can be adjusted against the tax amount payable towards the demand made u/s 73 pertaining to the said financial years?

No

It is mentioned that as per the third proviso to section 128A(1), no refund of such amount of interest or penalty or both, is available.

Accordingly, any amount paid by the taxpayer or recovered by the tax officers, as interest or penalty cannot be adjusted towards the amount payable as tax

4

Whether the benefit provided u/s 128A will be applicable in cases, where the tax due has already been paid and the notice or demand orders u/s 73 only pertains to interest and/or penalty involved?

Yes

Where the tax due has already been paid and the notice or demand orders u/s 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 u/s 75(12).

5

Whether the benefit u/s 128A is available, if the taxpayer intends to avail partial waiver of interest or penalty or both, on certain issues, by making part payment of the amount demanded in the notice/ statement/ order, as the case may be, and opts to litigate for the remaining issues?

No

Section 128A (1) clearly provides that the waiver of interest or penalty or both is only applicable when the full amount of tax demanded in the notice/ statement/ order is paid.

6

Where the notice/order involves multiple periods, ranging from the period for which waiver provided in Section 128A is applicable, and includes some other tax periods for which such waiver is not applicable, whether the benefit of waiver of interest or penalty or both u/s 128A can be availed for the period covered under section 128A?

If so, what is the tax amount payable for claiming waiver u/s 128A?

The taxpayer is eligible to apply for waiver of interest or penalty or both, in such cases where the demand notice/ order spans tax periods covered u/s 128A and those not covered under the said section.

However, as per 164(4), the taxpayer shall be required to pay the full amount of tax demanded in the notice/ statement / order, as the case may be, to avail the benefit of waiver of interest or penalty or both u/s 128A.

Further, though the amount of tax demanded shall be required to be paid as per the notice/ statement / order, as the case may be, for whole of the period covered under the said notice/ statement / order, but the waiver of interest or penalty or both u/s 128A shall only be applicable for the 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 u/s 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 u/s 128A, remains payable by the taxpayer.

The said amount shall be required to be paid by the applicant within 3 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 rule 164(17).

7

Where the notice/ statement/ order issued u/s 73 involves multiple issues and one of them is regarding demand of erroneous refund, whether an application can be filed for waiver of interest or penalty or both u/s 128A?

If so, what is the tax amount payable for claiming waiver u/s 128A?

Yes

However, as per rule 164(3), the taxpayer shall be required to pay the full amount of tax demanded in the notice/ statement / order, as the case may be, including on account of demand of erroneous refund, to avail the benefit of waiver of interest or penalty or both u/s 128A.

Further, in such cases, the waiver of interest or penalty or both u/s 128A shall only be available in respect of tax demand other than that pertaining to demand of 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 u/s 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 3 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 u/s 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.

8

In cases where department has filed an appeal against the order mentioned in clause (b) or clause (c) of section 128A(1) and the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority, has issued an order enhancing the tax liability, and in the meanwhile the proper officer has issued an order in FORM GST SPL-05 u/s 128A, and the taxpayer has not paid the said additional amount of tax liability within the specified time limit, what will be the status of the conclusion of proceedings u/s 128A?

Yes, as per the second proviso to section 128A, the conclusion of proceedings in such cases is 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 3 months from the date of the said order.

Accordingly, it becomes clear that even in cases where an order in FORM GST SPL-05 or in FORM GST SPL-06 has been issued the conclusion of the said proceedings will be subject to the condition that the taxpayer pays the additional tax amount as determined by the Appellate Authority or the Appellate Tribunal or the court or the Revisional Authority by an order issued in the matter of appeal filed by the department, within a period of three months from the date of the such order enhancing 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 164(16), the waiver of interest or penalty u/s 128A as per the order issued in FORM GST SPL-05 shall become void.

9

Section 128A(3) refers to only appeal or writ petition. In this regard, whether matters where SLP filed by the applicant is pending before the Supreme Court, what is the procedure to be followed by the taxpayer to avail the waiver of interest or penalty or both?

Yes, in such cases also the applicant will be required to withdraw the said special leave petition and file an application in FORM GST SPL-01 or FORM GST SPL-02, as the case may be, along with proof of withdrawal of SLP or the copy of the application or any other document filed for withdrawal of SLP, where the order for withdrawal of SLP has not been issued at the time of filing application in FORM GST SPL-01 or FORM GST SPL-02. In such cases, the procedure mentioned in para 3.1.6 may be followed.

10

Whether the benefit provided u/s 128A will be available for matters involving IGST and Compensation Cess?

Yes

On joint reading of section 20 of the IGST Tax Act and section 11 of GST (Compensation to States) Act along with section 128A of CGST Act, it becomes clear that the benefit provided u/s 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.

11

Whether Section 128A covers cases involving demand of irregularly availed transition credit?

The transitional credit is considered to be availed on the date on which the said credit amount is credited in the Electronic Credit Ledger.

On reading Rule 121 read with rule 117(3), it is clear that any demand in respect of transitional credit wrongly availed, whether wholly or partly can be made u/s 73 or 74.

Therefore, it is mentioned that if the amount of transitional credit has been availed in the period covered u/s 128A and notice for demand of wrongly availed credit is issued u/s 73, the same is covered under Section 128A.

12

Whether Section 128A will cover waiver of penalties under other provisions, late fee, redemption fine etc?

It is clarified that any penalty, including penalties u/s 73, 122, 125 etc, demanded under the demand notice/ statement/ order issued u/s 73, is covered under the waiver provided u/s 128A.

13

Whether payment to avail waiver u/s 128A can be made by utilizing ITC?

Yes

The payment of tax required to be made for eligibility for waiver u/s 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 RCM or by the ECO u/s 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

14

Whether the benefit of waiver u/s 128A be availed qua import IGST payable under the Customs Act, 1962?

No.

In such cases, demand is not issued u/s 73 of the 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 u/s 128A.

15

With retrospective insertion of sub-sections (5) and (6) to Section 16 of the CGST Act, the tax demanded in notice/ statement/ order reduces.

Whether the entire tax amount demanded in the notice/ statement/ order has to be paid in such cases, to avail the benefit under section 128A?

Rule 164(5) mentions that the amount payable in order to avail the benefit u/s 128A, shall be calculated after deducting the amount not payable in accordance with section 16(5) or 16(6), from the amount payable in terms of the notice or statement or order u/s 73, as the case may be.

Therefore, the applicant is required to pay only the amount that is payable, calculated after deducting the amount not payable in accordance with section 16(5) or 16(6), from the amount payable in terms of the notice or statement or order u/s 73, as the case may be, before submitting the application.

While calculating the amount deductible on account of not being payable u/s 16(5) or (6), from the amount payable in terms of the notice or statement or order u/s 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 sections 16(5) and 16(6), 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 section 16(4), but which is now available, as per section 16(5) or 16(6), he is not required to file application for rectification in respect of the same as per special procedure notified u/s 148 vide notification No. 22/2024- Central tax dated 8th October 2024.

16

In case of application in FORM GST SPL-02, where the applicant has paid full or partial amount of tax through FORM GST DRC-03, whether the said applicant is mandatorily required to file application in FORM GST DRC-03A for such tax amount which he desires to get adjusted against tax demand as per FORM GST DRC-07/ FORM GST DRC08/ FORM GST APL-04?

Yes

In cases where order in FORM GST DRC-07, FORM GST DRC-08 or FORM GST APL-04, as the case may be, has been issued and such taxpayer has paid required amount through FORM GST DRC-03, such applicant is required to adjust the said amount towards the demand created in the Electronic Liability Register, as per the second proviso to sub-rule (2) of rule 164, before filing the application in FORM GST SPL-02.