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Clarification in Implications of Section 128A of the CGST Act, 2017 / GST Waiver Scheme / GST Amnesty Scheme / Instruction No. 02/2025-GST / Circular No. 248/05/2025-GST

The Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 248/05/2025-GST, dated March 27, 2025, addressing key concerns related to the recently introduced Section 128A of the Central Goods and Services Tax (CGST) Act, 2017. This section, effective from November 1, 2024, provides a waiver of interest or penalty or both for demands raised under Section 73 for the period from July 1, 2017, to March 31, 2020.

Key Clarifications in the Circular

1. Eligibility of Cases Where Payment Was Made Through GSTR-3B Instead of DRC-03

One of the primary concerns raised by trade and industry stakeholders was whether payments made through GSTR-3B before the introduction of Section 128A would qualify for the waiver. The CBIC has clarified that:

• Any tax amount paid through GSTR-3B before November 1, 2024, shall be considered towards the waiver benefit under Section 128A, provided it was intended to be paid towards the demand.
• As per Rule 164(1), after the enactment of Section 128A, payments must be made via FORM GST DRC-03 to avail of the waiver.
• Taxpayers who made payments via GSTR-3B before the effective date will be eligible for the benefit, subject to verification by the proper officer.

2. Treatment of Appeals in Consolidated Adjudication Orders

Another key issue addressed in the circular pertains to cases where notices or adjudication orders cover periods both inside and outside the Section 128A waiver window.

• If a taxpayer seeks a waiver for periods covered under Section 128A (i.e., FY 2017-18 to FY 2019-20), they must file an application in FORM SPL-01 or FORM SPL-02 after clearing the applicable tax liability.
• The taxpayer must notify the appellate authority or tribunal of their intention to avail the benefits under Section 128A and withdraw the appeal for the relevant period.
• The appellate authority or tribunal will pass orders separately for the period not covered under Section 128A.

3. Departmental Appeals Against Interest and Penalty

Further clarifications were issued in Instruction No. 02/2025-GST, dated February 7, 2025, regarding appeals filed by the department solely on interest and/or penalty calculations under Section 128A. The CBIC has observed that:

• If the taxpayer has fully paid the tax demanded under Section 73, but the department has filed or intends to file an appeal due to an arithmetic miscalculation of interest or a dispute over the penalty amount, such cases should still be eligible for the benefits under Section 128A.
• The intention of Section 128A is to reduce litigation, and taxpayers should not be denied the benefit due to mere technicalities.
• Proper officers are directed to withdraw departmental appeals in cases where tax has been paid in full, and the dispute pertains only to interest or penalty.
• If the adjudication order is under review and involves only interest or penalty, it should be accepted rather than appealed.

Impact on Taxpayers

The clarifications provided in Circular No. 248/05/2025-GST and Instruction No. 02/2025-GST offer significant relief to taxpayers by:

• Allowing past payments through GSTR-3B to be considered for waiver benefits.
• Simplifying the appeal withdrawal process for cases covering multiple periods.
• Ensuring uniform application of the law across all GST field formations.
• Reducing unnecessary litigation by instructing proper officers to withdraw appeals related solely to interest and penalty disputes.

Conclusion

The introduction of Section 128A and the subsequent clarifications are a step towards reducing the burden of interest and penalties on taxpayers. Businesses that have made payments before November 1, 2024, should verify their eligibility and approach the GST authorities for necessary compliance measures. The CBIC has invited feedback on any implementation challenges, ensuring that further refinements can be made for smoother execution of these provisions.

 Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.